February 3

2/3 – In its biannual inventory report, the USDA said total cattle and calves (feedlots + pasture) in the U.S. were 94.4M head on Jan 1, down 0.4% from 94.8M a year ago and the first decrease in 6 years. Cow and heifer numbers at 40.7M head are down 0.7%, while heifers on feedlots (headed for slaughter) are up 4.0% and now account for 38.3% of feedlot inventories. Traditionally, when the percentage of heifers on feedlots rises above 36% for an extended period, it indicates producers are not retaining enough females for herd expansion. Heifers have now been consistently above that 36% level since Q4 2018 – so no surprise that total cattle inventory levels are down – and likely headed lower in 2020. Cattle futures closed at $121.38/cwt on Friday after averaging $115.67 in 2019. Forward futures for 2020 are averaging $115.38 vs the USDA’s forecast of $117.50.