The USDA’s National Agricultural Statistics Service (NASS) recently released their monthly Cattle on Feed report that included an eye-popping 18% decrease in placements over last year. The surprise is that we were all surprised.
We have to keep in mind that in 2024, winter seemed to hit everyone everywhere in any way it could. Pens across the country filled up much sooner than most anticipated and hit the Cattle on Feed report with a big speedbump increase over 2023’s numbers. Additionally, there was an extra day of reporting since 2024 contained a leap day in February. Regardless, the numbers were propped up and had to be taken with a grain of salt. We have to go back to the March of 2024 report and remember that placements were 10% higher than 2023 due to all the abnormal conditions. In the April 2024 report, the number came back to reality by decreasing by 12% over 2023.
This turbulent 2024 month is still wreaking havoc in the reporting, but we must wash out the abnormalities to gain a true comparison. Leading up to the release of the latest report, nearly every single analyst was calling for a double-digit decrease; however, not many called for one as drastic as 18%.
We clearly assume that a huge decrease in the southern part of the country not seeing as many Mexican feeder cattle played a major role in this swing, but a major driver is that the calf crop just isn’t there across the nation. We can’t have a sustained record low cow inventory and not expect these reports to continue the downward trend. Everything we do in ag is driven by data and trend lines. We have to listen to what they are saying.
Additionally, this report included another driver into the recent surge in our markets. From the last report, 1.63 million head of fed cattle were marketed which is a 9% decrease from 2024’s numbers. All numbers across the board showed us what we already know—the inventory isn’t there.
So, depending on where you sit in the industry, this information leaves you with some decisions to make this year.
We have already seen what the feeder and packers are doing to offset lower inventory. Carcass weights are continuing to be pushed into new realms every week. This allowed overall beef production to increase slightly last year. This trendline doesn’t show any signs of changing. These finished cattle are going to get big. However, the genetics inside these cattle have allowed this ability to happen and cattle are going to see their limits. Carcass merit seen marketed through quality-based marketing are also going to continue to see huge dividends for higher grades and spreads will most likely separate farther.
Feed availability is going to create an interesting scenario and the next 90 days are going to play a major role in our industry and will undoubtedly impact what cattle are going to do this fall. With much of the Midwest seeing drought conditions, threatening a dry spring and summer, it will pinch a lot of feeders if high inputs for both cattle and feed happen with continued high interest rates; many operators could be in for a stressful season. If weather patterns turn favorable and feed remains available, some flexibility for these operators will help them hit markets for both pounds and quality that will keep most of them afloat through this cycle.
From the cow-calf sector, excitement and anticipation will have everyone with high anxiety until the check clears. Live cattle took a big jump once again over the last few weeks. Four-weight calves bringing into the $5/cwt levels consistently and eight-weight cattle bringing near $3/cwt or more seem to be happening every day. Cattle buyers aren’t holding back and it’s a scramble for inventory. This market continues to stair-step higher.
Cautiously, we are all excited to sell cattle right now. I was traveling recently in the Montana/Wyoming region and it’s still hard to see herd dispersions happening. People are seeing this as an opportunity. In fact, at the Vermilion Ranch replacement female sale, as I was touring through the offering with Joe Goggins, there was more than once that he said “this will be the last time we get to own their cattle” referring to cattle they bought last summer, and the cow herd was later sold in its entirety.
It’s an ever-changing situation. From a production standpoint, it’s a time to be smart about revenue and management decisions. It’s not a time to get greedy.
Some good news for producers trying to make better and more informed management decisions is the mid-year Cattle inventory report being reinstated for 2025. Last April, NASS had made the announcement that 2024 would not see a report, but enough voices rang out and we will fortunately see a report again this summer. That’s a win for all of us. — LOGAN IPSEN
