After several years of contraction, there may be some indicators that the U.S. cattle herd is rebounding.
Bernt Nelson, an economist for the American Farm Bureau Federation (AFBF), said the March 1 Cattle on Feed report from the U.S. Department of Agriculture (USDA) has an interesting story to tell.
“The USDA estimates there were a little bit over 11.5 million head of cattle in the U.S. in feedlots on March 1. This number’s down about 2% from last year,” Nelson said. “Placements—that’s where the real story starts to unfold here. Placements came in at 1.55 million head, down a whopping 18% from last year, and so that starts to ask the question, could this be a sign of some herd expansion?”
In Texas, there were 2.64 million head of cattle in feedlots, down 6% from a year ago. Placements were at 260,000 head during February, which is down 27% from last year.
Livestock markets responded accordingly to the release of this report.
“Overall, this was a pretty bullish report. Futures markets rallied early on, with several contracts hitting new highs before they kind of fell off,” he said. “There’s still a lot of fundamental uncertainty in the market surrounding where the economy is headed. When you add this in, the prospect of tariffs, export uncertainty, that’s more demand uncertainty. This has led to a pretty high level of volatility in futures.”
Summer grilling season, which is just around the corner, is the peak demand for beef, and the prices at the grocery store may be impacted.
“But when we see placements of cattle on feed dropping now, that means we’re going to have fewer cattle available later for marketing in the summer, and this has the potential to tighten beef supplies even further as we kind of go into grilling season,” Nelson said. “And this means that consumer demand is going to be the key puzzle piece dictating where prices go.”
The Jan. 1 Cattle Inventory report showed there were 86.7 million head of cattle and calves in the U.S., down 1% from last year.
USDA announced it will reinstate its July Cattle Inventory report, which will provide insights into whether cattle herd rebuilding is truly underway.
The next Cattle on Feed report will be released on April 17.
Leave A Comment