Update: See the April 2015 USDA Cattle on Feed report

On Friday the USDA cattle on feed report showed cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head at 10.658 million head on March 1, 2015. The inventory was 1% below March 1, 2014 and about 15,000 less than the trade expected.

USDA Cattle on Feed Report: Slightly lower-than-expected February placements trimmed inventory a tad, but likely not enough to move Monday's market.

Placements in feedlots during February totaled 1.523 million, 8% below 2014 and about 19,000 less than the trade expected. Net placements were 1.46 million head. During February, placements of cattle and calves weighing less than 600 pounds were 330,000, 600-699 pounds were 270,000, 700-799 pounds were 388,000, and 800 pounds and greater were 535,000.

Marketings of fed cattle during February totaled 1.516 million, 2% below 2014, but about 7,000 more than the trade expected. February marketings were the lowest since the series began in 1996.

Other disappearance totaled 62,000 during February, 13% below 2014.

Annual average prices should advance. USDA forecasts the 2015 annual average 5-area fed steer price in the $157 to $167 range, up from last year's $154.56 and almost 70% higher than the $98.35 average just five years ago in 2010.

Annual average 2015 Oklahoma City feeder steers are forecast in the $207 to $217 range, up from last year's $202.82 and nearly double the $109.31 average in 2010.

Price action from December onward suggests the ride will be anything but smooth. So hang onto your hats and consider taking advantage of pricing opportunities when they present themselves.

Heavier weights support production. Despite expected year-over-year lower total first-half 2015 net placements in 1,000-plus head feedlots, Ken Mathews, a USDA economist, expects second-half 2015 beef production to be near 2014 production for the same period because of longer feeding times for steers and heifers, heavier dressed weights for all cattle and more steers and dairy cows in the slaughter mix.

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March 1 Cattle on Feed a tad lower than expectations.

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Those forces will hold expected 2015 domestic beef supply at 53.9 pounds per person, down just 0.3 pound from last year. So beef supply will not be significantly tighter. However, per capita pork supply is projected at 49.2 pounds, up 2.8 pounds from last year. Per capita broiler supply is projected at 87.2 pounds, up 3.8 pounds from last year. Per capita turkey supply is projected at 16.3 pounds, up 0.5 pounds from last year. That means beef will face rising supplies of much lower priced meat proteins.

In comparison with competing markets, the spread between beef and pork and beef and chicken remains wide, and this could leave beef at a disadvantage in seasonal consumer purchasing patterns and the mix of retail features on a weekly basis. The popularity of ground beef remains intact despite ground beef prices above 2014 levels. Lean processing beef prices subsided in February but remained well above the 5-year average. Imports of lean processing beef from Australia and New Zealand remain robust and are alleviating some of the upward momentum in the spot lean-processing meat markets. Nonetheless, beef prices are not expected to undergo the large decline anticipated in the pork and poultry markets this year.

More signs of cow herd rebuilding. USDA tallied January 2015 federally inspected heifer slaughter at 649,300 head, compared with 751,500 head in January 2014. Those figures represent 35% of total FI steer and heifer slaughter of 1.858 million head in January 2015 and 37% of 2.051 million head in January 2014.

The reduction of heifer slaughter in the steer and heifer mix is likely a result of producers retaining some extra heifers for breeding purposes.

Thus far in 2015, commercial cow slaughter appears to be largely of dairy cows, which—due to their larger size— results in higher average dressed weights. However, commercial beef cow slaughter was down by 24%, leaving total January commercial cow slaughter down by 11% year over year, still indicating efforts to rebuild the beef-cow herd. January 2015 monthly commercial dairy cow slaughter was up 2% year over year. Weekly FI cow slaughter indicates a continuing pattern of relatively high dairy cow slaughter, with average dressed weights for all cows reaching a weekly record high of 663 pounds per carcass.

See the February 2015 USDA Cattle on Feed report recap