May 24

5/24 – In Friday’s Cattle on Feed report, the USDA said feedlot inventories, at 11.7M head on May 1st, were up 4.7% from a year ago - fueled by a 27.2% surge in April placements. But, discounting the Covid-reduced 2020 numbers and comparing to 2019, cattle inventories are down slightly (-0.7%) and placements 1.1% lower. With finishing (feed) costs high, producers would love to hold feeders on pasture for as long as possible. But drought is decimating U.S. pasture conditions. Heifers were 30.3% of the slaughter mix over the first 4 months of 2021 and not yet at liquidation levels – but it is shaping up to be a tough summer. Herd liquidation would mean higher slaughter numbers in 2021, followed by tighter supplies in 2022. Cattle futures are $117.67/cwt (5/21) vs $98.80 last year and $110.85 in 2019. Second-half 2021 futures are averaging $124.86/cwt; 2022 futures $129.30.