February 24

2/24 - In Friday’s Cattle on Feed report, the USDA said new placements onto feedlots in Jan were down 0.6% from a year ago, but that the Feb 1st feedlot inventory, at 11.93M head, was still 2.2% above last year. Several macro issues will affect beef this year and next. The first is prospects for a smaller cattle herd. The percentage of heifers on feedlots (at 38.3%) is well above the 36% level that indicates producers are not retaining enough breeders to maintain herd size. Secondly, coronavirus in China will mean a big drop in Chinese demand, due to fewer consumer purchases and supply chain disruptions. That will (temporarily) give the U.S. better access to Australian beef. However, once China recovers from the virus, pent-up demand and a huge ASF-driven protein supply gap will drive China to chase every available pound of protein available in the global marketplace.