March 1, 2021 Cattle on Feed Inventory up 1.6% From 2020

 

Cattle on feed reports are key indicators of beef supply in the coming months and have implications for fed and feeder cattle prices. Each month, the USDA surveys feedlots with capacity exceeding 1,000 head and provides an estimate of the total number of cattle on feed at the beginning of the month. Estimates are also provided for placements and marketings from the previous month, as well as a number of other measures. A quick comparison of January 1 estimates from the USDA January Cattle Inventory report and January’s Cattle on Feed report suggest that the monthly survey of these 1,000+ head capacity feedlots likely represents a little over 81% of total cattle on feed in the US.

 

The February weather challenges across much of the country’s major cattle feeding areas left a bit more anticipation than usual for Friday’s Cattle on Feed report. It was unclear how much winter weather impacted sales and transportation of feeder cattle and fed cattle last month. We definitely saw fewer cattle move through markets in the region and most expected some impacts to be seen at the feedlot level.

 

As of March 1st, total cattle on feed inventory was estimated to be up 1.6% from 2020. This was largely in line with pre-report expectations. Weather challenges were likely the reason why there was a wider-than-usual range of pre-report estimates for February placements and marketings. Both came in down around 2% from February 2020, which was likely the result of weather impacts this year. Feedlot inventories typically increase through winter and spring and then decline through early fall.

 

It will be interesting to watch cattle on feed patterns through 2021. As we have discussed previously, the 2020 calf crop was smaller than 2019, and 2021 will be smaller still. Plus, sharply higher grain prices tend to encourage the placement of heavier feeder cattle and decrease the number of days that cattle are fed. Holding everything else constant, both of these factors tend to reduce the number of cattle on feed at any given time. Remember too, that year-over-year comparisons will be very strange in the coming months as spring 2020 placements and marketings were drastically impacted by COVID. This was the focus of last week’s Cattle Market Notes Weekly.