Cattle marketed during February totaled 1.755 million head, down 2.0 percent from last year. The expectation was for marketings to be lower by 0.5 percent, so the marketings number should be considered bearish (especially given that it was below the lowest estimate of -1.8 percent).

The higher on feed number should not be too alarming. As has been mentioned in this write-up many times in the past, there were many lightweight cattle put on feed for the past six plus months and some of those cattle are still lingering in feedlots.

The higher placements, on the other hand, does buck the trend over the past two reports that showed lighter placements compared to year ago levels. The lower move in the corn market along with steady to higher prices throughout the month of February tilted the feeding profitability window into positive territory.

This led to an increased incentive for feedlots to procure cattle since they could, for all intents and purposes, lock in a profit. As a result feeders were aggressive in locating cattle to place on feed and this shows up in this month's report.

Heavier cattle, those over 800 pounds, experienced the largest increases from year ago levels, which should not be a surprise since the drought had begun to take hold of the Southern Plains, which led to increased light weight placements and a smaller number of heavy weight placements.

Further implications of the drought have been the lack of available cattle in the U.S. This has led to an increase of feeder cattle from Mexico being imported to fill U.S. yards.

A quick look at data from LMIC show that the current four week average of imported cattle from Mexico is 5.8 percent above 2011 and 45.5 percent above the average from 2006-2010.

The lower marketings number was unexpected but is understandable. For most of 2012, fed cattle trade has been slow.

The aggressiveness that was present to place cattle into feedlots during February was not present when it came to marketing cattle. Market ready cattle had high breakevens and therefore feeders were reluctant to pull the trigger. 

—From Livestock Marketing Information Center's 'In the Cattle Markets' e-newsletter