Cattle on Feed at Record Level – 02/25/2022

The USDA reported the number of cattle on feed last month was a record level for a February 1 while January net cattle placements declined two percent year over year. January finished cattle marketings declined three percent compared to the same month in 2021.. The January data suggest finished cattle marketings during  February/July 2022 will decline  two percent compared to feedlot sales in the same period of 2022.

Live cattle futures have been trading on the high side of historical economic value in 2022.USDA forecasts suggest the April and June live cattle contracts could trade back into the low $130s. However, the cattle industry is still living on the herd without a strong suggestion that ranchers are inclined to hold a larger percentage of heifers for breeding. The substantial premium for 2023 live cattle futures contracts over nearer deliveries  is evidence the market  expects cattle supplies to tighten this fall. The need to rebuild the herd will be a supporting force for nearer live cattle contracts.

The volatile feed market also is a supporting force in the cattle market as cattle near finish are a more valuable commodity when feed prices exceed the norm as is currently the case.