The USDA publishes a monthly report that surveys feedlots with 1,000+ capacity (85% of all fed cattle). It provides data on inventory levels, placements, marketings and other disappearances.
Over the past several months, total on-feed inventories have remained well above year-ago levels. However, several factors have affected these figures such as large slaughter disruptions in April and May, a backlog of fed cattle, and changes to timing and weight of feedlot placements.
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Total Inventory
USDA reported on June 1 that the total inventory of cattle on feed in the United States had increased slightly above average but remained in line with year-ago levels. Stockpiles are affected by weather patterns, processing plant closures and other factors.
The inventory estimate for fed cattle on feed market is calculated based on data collected from feeders with 1,000 or more capacity, which account for around 85% of all fed cattle.
Heifers make up nearly 40% of cattle currently being fed. This percentage is similar to what was observed at the peak of last cycle’s cattle production.
This indicates producers are not expanding their herds and may not have any plans to do so. Heifer slaughter has been slightly lower this year (2021) than 2020, which may reflect freshening with younger cows.
Placements
On July 1, according to the June NASS Cattle on Feed report, 11.7 million head of cattle were in feedlots with capacity for 1,000 or more head. This represents an increase of 1.6 percent from a year earlier and marks the highest June total since 1996. Despite these increases in inventories, they remained well below year-ago levels.
The inventory estimate includes 7.033 million steers and 4.405 million heifers on feed in 1,000+ capacity feedlots, down 1.5% from a year earlier while steer numbers increased 0.3%.
Although June placements of new cattle were slightly lower than a year ago, they still exceeded the average trade guess. After an impressive May placements number, June placements typically decline in subsequent months.
Feeder cattle weights placed in feedlots provide insight into short-term market movements. However, looking long term across geographically dispersed areas provides a more complete picture of shifting market fundamentals.
Marketings
Due to COVID-19’s labor restrictions and temporary closures at beef processing plants, feeder cattle marketings were severely restricted as producers resisted offering their calves for sale. As a result, there were fewer animals available for placement in July and August.
Eventually, the backlog of cattle on feed began to reduce and slaughter began again on Saturdays as more processing capacity became available. Nonetheless, there remained a substantial number of marketable cattle to be cleaned up and moved out from behind before adding new stock into the pipeline.
On Friday, the USDA’s Cattle on Feed report provided some much needed relief from last year’s four month stretch of placements which ran higher than usual. While not shocking news, this data provided some much-needed comfort.
Backlog
Though the number of cattle on feed for 120 days declined slightly in June, there remains a large backlog of fed cattle in feedlots. This must be cleared out before front-end supplies reach the same slaughter levels experienced one year prior.
Oklahoma State University Agricultural Economist Derrell Peel reported in his Cow/Calf Corner newsletter to Extension Agents that cattle feeders stayed on farms longer than usual this spring and into May, leading to a backlog. Furthermore, Derrell Peel noted the low feeder placements as evidence that front-end feedlot supply will remain tight at least through September.
As this backlog continues to decrease, less demand will exist for feeder cattle and they will eventually disappear from feedlots. Until then, feeders must contend with lower prices as well as lack of space at their facilities and dry conditions – all of which combined will contribute to shrinking the overall beef herd.
