Today’s Canfax COF report for May 1 exposes the current feedlot inventory situation. As of May 1, total numbers on feed were down 7% from last year, down 10% from 2010 and the smallest May 1 inventory other than 2008. Coincidentally, that was also a year that saw large exports of feeder cattle during the first 4 months (255,000 in 2008).
This year’s feeder exports are sitting at 70,000 head to date but still larger than the 40,000 by this time last year. April placements according to today’s Canfax report are 25% smaller than last year and 30% smaller than 2010. It was also the smallest April placement since this data started being collected in 2000. Heifer placements in April were 32% smaller than a year ago while steer placements were down 20%. Year to date placements for 2012 are down 10% overall.
I don’t think the direction of numbers is a surprise but sometimes the actual degree of decline can be and I think that’s maybe where this will get some eyes open. Market impact isn’t an “overnight” response especially since very few feeders will be offered again until late July or August. On the packer side, I do think this week’s higher AB market is a sign that packers are watching these numbers very closely.