August 23

8/23 – In Friday’s Cattle on Feed report, the USDA said feedlot inventories (at 11.07M head on Aug 1), were down 1.9% from a year ago and 0.3% below 2019 levels. New feedlot placements in July were 8.1% below last year, following a 7.1% year-over-year decline in June. In an interview Market Vision conducted on behalf of the NRA, economist Mike Zerr from Cargill said that we are in the 3rd year of a liquidation and contraction cycle for cattle herds that is being compounded by this year’s drought. Higher cattle/beef prices will eventually incent expansion, but that is a long, multi-year process. In its August WASDE report, the USDA lowered 2021 beef output from 2.7% to 2.6% above 2020 and projected 2022 to be down 3.2% from 2021. Cattle futures at $124.28/cwt (8/20) are well above a 5-year average of $107.49. April 2022 futures are $140.70; Sept 2022 are $165.50.