SALEM — USDA’s mid-year cattle inventory and cattle on feed reports were both bullish for cattle producers, showing year-over-year declines in cattle numbers.

Total inventory of all U.S. beef and dairy cattle on July 1 was down 1.3% to 100.9 million head. The number of cattle being fed for slaughter in large feedlots was also down 1.3% to 11.3 million.

The inventory report also suggests tighter supplies ahead. While the 2021 calf crop is projected to be only slightly lower year over year, the number of beef cows was down 2% and replacement beef heifers were down 2.3%.

The report also estimated feeder cattle supplies outside of large feedlots at 1.6% lower than a year earlier, with the total inventory in all feedlots, not just large ones, down 1.5%.

Both of the reports were positive in direction, and both were bullish in what was expected, said Don Close, senior animal protein analyst with Rabobank. The industry was anticipating the right direction, but the decline in numbers was more aggressive than the market anticipated.

“We actually got positive news for a change,” he said.

The decline in cattle on feed showed the market is finally working through the backlog of COVID cattle. The decline in overall inventory was more of an indication of drought in the West, with producers unwilling to buy hay at high prices, he said.

Every category in the inventory report was on the low side, but the 2% decline in beef cow numbers was a big surprise, Close said.

Cattle markets are already starting to see some recovery, with fed cattle trending toward $130 per hundredweight by year’s end. That price could rally to $135 in the spring, he said. Given the price of feeder cattle, there’s a slug of calculated feed yard breakevens at $135 to $140, even as high as $150 from some auction prices out there, he added.

“The prices these guys are willing to pay for feeder cattle looks like they’re betting it all to me,” Close said.

The Chicago Mercantile Exchange feeder cattle index on 850-weight steers is in the $152 to $154 slot. Fall future prices are in the low to mid $160 level, according to Close.

“I think the market’s ahead of itself, particularly with the feeding uncertainty and vulnerability in the corn market,” he said.

Given the drought, Close thinks calves and feeder cattle are both going to move earlier this year. The bulk of those cattle could already have moved by October and early November. Farther out, a smaller calf crop and additional cow liquidation could bring a sizable decline in feeder cattle outside feed yards a year from now, he said.

July 1. U.S. cattle inventory

Class 2020 2021 percent change

Million head

All cattle and calves 102.2 100.9 -1.3

Beef cows and heifers that have calved 32.0 31.4 -2.0

Replacement beef heifers 4.4 4.3 -2.3

Calf Crop 35.1 35.1 -0.1

Source: USDA-NASS

Cattle on feed, placements, marketing, and other disappearances (feedlots with 1,000 head capacity or more)

Item 2020 2021 percent change

Million head

On feed July 1 11.4 11.3 -1.3

Placed on feed during June 1.79 1.67 -7.1

Fed cattle marketed during June 1.96 2.02 2.7

Source: USDA-NASS

Sign up for our Daily Headlines newsletter

Recommended for you

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.