August 22

8/22 - In Friday’s cattle report, the USDA said feedlot inventories totaled 11.22M head on Aug 1, up 1.4% from a year ago. New placements onto feedlots were larger than expected in July, up 1.8%, following 3 straight monthly declines. Drought continues to be the driving factor, forcing producers to liquidate feeders at younger ages and lighter weights. August could be more of the same, then we fall off a cliff on new placements for the next year or two. In August’s WASDE, the USDA projected a slim, 0.1% increase in beef output for 2022 followed by a 6.1% drop in 2023. The USDA forecast 2023 cattle prices to average $154.00/cwt, up 8.4% from $142.20 for 2022. Cattle futures set a 7-year high of $144.10/cwt on 4/21 and remain strong at $141.60 (8/19). Supplies look to be lower through 2025. Any major break in beef prices would have to come from a drop in demand.