Drought and cattle supplies
“I think we can really call this report bullish, with total cattle on feed coming in right around 11.4 million, down one percent from this time in 2021. Placements are a little bit over two million head, this is four percent below this time last year in 2021.”
Nelson says placements were down the most in drought-stricken states.
“This is likely due to some tighter calf supplies along with higher feed and input costs amplified by the drought conditions. We've seen marketings for fed cattle totaling 1.86 million head for September, this is four percent above this time in 2021. Now, when we really see marketing high and placements become lower over a longer drawn out period of time, this really signals that lower cattle supplies are in the future.”
Additionally, USDA’s Livestock Slaughter Report shows higher beef slaughter numbers.
“So, on October 26, we had 129,000 head processed. So, what we're seeing here is when the packer really starts trying to reach out and get a hold of these numbers ahead of time, this really tells you that they need to get their hands on cattle to meet the current demand situation. When we see the supplies start to tighten up and we see demand kind of remaining consistent, we're going to see some upward support in prices.”