Cattle On Feed Report Is A Bear, Milk Production Continues to Grow

USDA's May Cattle on Feed report showed placements ahead of a year ago but reduced marketings, leading to a bearish feeling in the markets. May milk production was up on--you guessed it--a larger dairy herd. In investment news, the surge in risk free treasury yields is sending bond investors in search of better opportunities. 

Transcript

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Hello and welcome to Cappy DC. I'm back with a quick update on business news. Got your three articles all queued up. Today's Monday, May 25th. Happy Memorial Day, everybody. Today we're going to focus on a couple of USDA reports, including cattle on feed and milk production. Then wrap up with a look at Wall Street. So let's get to it. Cattle and calves on feed for the slaughter market in the U.S. for feedlots with a capacity of a thousand or more head. Totaled 11.6 million head on May 1st. Inventory was 2% above May 1st, 2025, according to USDA's report that came out on Friday. Placements in feedlots during April totaled 1.7 million head, which was 6% above 2025. Net placements were 1.65 million head. Marketings of Fed cattle during April totaled 1.64 million head, which was 10% below last year. Other disappearance totaled 52,000 head during April, which was 4% above 2025. In the analysis, Shaley Stewart, who's a livestock analyst with DTN Progressive Farmers, says cattle on feed report hit the marketplace like a quote mech truck. She said that regardless of whatever line item you analyze, an overwhelming bearish sentiment is what stemmed from Friday's report. She says the biggest year-over-year change came from the placement data, which showed placements up six percent. In comparison, placements a year ago were notably lighter because the market wasn't taking anything from Mexico. Still, that six percent year-over-year increase when the border remains closed is telling. Biggest factor has been drought, which continues to plague much of the high plains, which has forced some producers to sell early because they just don't have the grass to turn cattle out this summer. Stewart says the major other major takeaway came from the total on feed number, which was which came uh up 2% higher than a year ago. It's been widely talked about how cattle are now being fed to greater weights. That also means that cattle today spend more time on feed. Industry standard used to be 120 days on feed to finish, but there are far more cattle that kill around 190 days on feed today than those than there are those that finish at 120 days. If you want more information, I'd highly encourage you to catch the full report on the DTN Progressive Farmer website. As for dairy, milk production in the U.S. during April totaled 20 billion pounds, which was up 2.7% from April last year. Production per cow in the U.S. averaged 2,069 pounds for April, which was 14 pounds ahead of April last year. That's not the story. The number of milk cows on farms was 190,000 head more than April of last year, 10,000 head more than March 2026. So our U.S. dairy herd continues to grow at a rapid pace. Kansas continues to keep up the pace, up 23.7% over last year on 46,000 more cows. All major dairy producing states saw good growth, with California up 2.3% on considerably more milk per cow. Idaho was up 3%, Michigan was up 4.1%, Texas was up 4.4%, and Wisconsin was up 2.9%. In investment news, the surge in risk-free treasury yields is sending bond investors in search of better opportunities. U.S. Treasury bonds typically occupy a special place in investors' portfolio, asset class against which all other market risk is measured. But a surge in long-dated yields is forcing investors to rethink this assumption. The yield on a 10-year Treasury recently surged to a level it hadn't seen in over a year, while the 30-year Treasury yield this week hit a level it hadn't seen since 2020, right ahead of the financial crisis that happened shortly thereafter. The moves are being driven by geopolitical conflict and that pesky oil price shock that's rekindled inflation and resulted in a growing consensus that the Federal Reserve will not lower rates at their next meeting, which will be the first since new Fed Chairman Kevin Walsh was confirmed with a mandate from President Trump to bring rates down. In fact, traders are now betting there will be no interest rate cut over the remainder of 2026 and that a rate hike is becoming more likely. Walsh was being sworn in by Trump on Friday. The shift in bond market assumptions is a wake-up call for investors in an asset class that has long been called a safe heavy safe haven due to bond's predictable income and guarantee of the return against maturity. HSBC wrote in a note this week that U.S. Treasuries are now in a quote danger zone. On Friday, the 10-year U.S. Treasury yield was at 4.57%, while the 30-year Treasury bond was up to 5.08%. Well, that's all for now. As always, thanks for tuning in. If you found it useful, comment, share, subscribe, tell all your friends. We'll be back tomorrow with more news across the AG and financial markets. Until then, I'm Mike Opperman, and goodbye for you.