Cattle Feedlots Stay Full – 11/20/2023

Cattle on feed November 1, 2023 neared the record large set in November 2020 despite scarce feeder cattle supplies. Reduced finished cattle marketing and placing a larger share of available feeder cattle kept the on feedlot population surprisingly large last month.

Earlier this month USDA forecast the 2024 per capita domestic beef supply at 55.6 pounds, down from 57.9 pounds in 2023 and the tightest domestic beef supply since 2015. We have scattered the high and lows (adjusted for inflation) for April live cattle as a function of the annual domestic per capita beef supply. The point marked USDA is USDA’s November estimate for booth supply and first quarter price.

April cattle are presently trading about $7 per Cwt. discount to the USDA price projection. At some point April cattle futures and USDA’s price projection will merge.Traders holding long cattle futures positions will have a $7.00 advantage, but that does not guarantee a profit  as the USDA might be too optimistic and need to drop  the cattle futures price projection. Our studies suggest USDA’s price forecast is optimistic considering prospective US beef supplies as assumed in the November 2023 WASDE report..