January 2

1/2 - In its monthly cattle report, the USDA said feedlot inventories on Dec 1st were 12.01M head, up 2.7% from a year ago. New placements onto feedlots in Nov were down 1.9%, and Nov marketings were down 7.4%. Larger feedlot inventories, combined with fewer placements and marketings, indicate a back-up in supply and/or a slowdown in demand. While consumers were pushing back against record high beef prices this past Fall, producers were liquidating herds to cash in high feeder prices. Cheaper feed and good weather helped with weight gain. CME cattle futures set a record high of $187.07/cwt on 9/22 and closed 2023 seasonally lower at $173.68 on 12/29. Forward futures for 2024 are averaging $173.14/cwt, just slightly above $172.60 in 2023. In Dec’s WASDE, the USDA projected a 3.5% drop in beef output for 2024. We think the Q4 supply backlog will cut 2024’s production decline to the 1.0-2.0% range.