Friday's USDA Cattle on Feed report should have a neutral influence on futures when trade resumes Monday, according to DTN Livestock Analyst John Harrington.

"While the exact spin of revolving doors in cattle feeding country last month was a bit different than expected, the net traffic flow was dead on with the average trade guess," Harrington said. The February 1 Cattle on Feed total was 11 million head, down 3 percent from last year and down 6 percent from the 3-year average. This represented the shortest bunk line for the period since 2003, Harrington said.

Placements were somewhat larger than the average pre-report guess, coming in at 1.83 million head, 2 percent below 2009. The average pre-report guess was for a 5 percent drop. "Only Colorado (off 35 percent) and Texas (off 5 percent) actually placed less cattle in January than the previous year," Harrington said. In addition, in-movement grew in Iowa (up 17 percent), Kansas (up 9 percent), Nebraska (up 3 percent), and Oklahoma (up 11 percent), he noted.

The placement weight breakdown indicated that all of the decline was tied to cattle weighting between 600 pounds and 699 pounds (i.e., off 12 percent). "This makes sense given what we know about more cattle out on wheat pasture," Harrington said.

According to the DTN placement model, big lots now have approximately 2 million head scheduled to finish in May, 7 percent smaller than the spring of 2009 and 13 percent below the 4-year average.

January marketings were larger than last year, up 2 percent. Harrington said this was particularly impressive given that last month contained one fewer business day than 2009.

"While there's nothing earth-shaking about any of this, the details of the report could work to further fuel bull-spreading interest when the board resumes trading on Monday," Harrington noted.
 

Source: DTN-Posted by Russell Nemetz