January 23

1/23 - In Friday’s monthly cattle report, the USDA said feedlot inventories totaled 11.68M head on Jan 1, down 2.9% from a year ago. New placements onto feedlots in Dec were down 8.0%. Heifers (breeding stock) accounted for 39.8% of feedlot inventory, far exceeding the 36% threshold that historically indicates herd liquidation. CME cattle futures set fresh 8-year highs at $158.50/cwt on 12/29/22 and remain high at $156.62 (1/20/23). Forward contracts for 2023 are averaging $159.42. In Jan’s WASDE, the USDA forecast 2023 cattle prices to average $158.50/cwt, up 9.7% from $144.40 for 2022. The USDA is also projecting a huge 6.5% drop in beef production for 2023. The U.S. cattle inventory has declined by 4.7M head since 2019. There are just not enough females/breeders left in the U.S. herd to turn the corner on increasing beef output for the next few years.