October 26

10/26 – In Friday’s Cattle on Feed report, the USDA said feedlot inventories on Oct 1st were 11.7M head, up 3.8% from a year ago. New placements in Sept were up 5.9%. That follows 11.0% & 9.1% increases in July & Aug, respectively. The jump in summer placements was partially a catch-up and rebalancing following processing plant closures in April/May. However, many of those July/Aug placements are due to herd liquidation as summer drought in OK/TX/KS decimated pasture conditions and raised feed costs for producers. Uncertainty regarding foodservice demand is also accelerating the trend toward cattle herd liquidation, which will lead to increased beef output in 2021. Cattle futures that averaged $125.17/cwt in Jan, and plunged to $83.83 in April, have rebounded to $103.35/cwt. Q4 2020 futures are averaging $103.46, 11.6% below $117.01 for Q4 2019.