Cattle on Feed & USDA Price Forecasts Analysis -10/23/2023

Feedlots reduced year over year sales of finished cattle last month but increased feeder cattle placements  compared  to activity in September 2023. Feedlots have reduced year over year marketings as increasing finishing schedules was cheaper than buying expensive feeder  cattle.

USDA has increased the US beef production 2023 estimate by about one billion pounds over the last year and boosted the 2024 estimate by about a half billion pounds since the first projection in May 2023. Nevertheless the domestic  beef supply projects to tighten over the next year.

We have prepared scatter studies which use Midwest steer prices as a function of quarterly domestic US per capita beef supply with projections made by USDA. Note in the first study (October/December) USDA’s estimate is reading high on historical data. The leftward shift in the beef supply/demand point is likely due to inflation and the need to increase the number of heifers sold as feeder cattle (reducing beef supply) to expand the cattle herd.  

USDA has maintained the leftward shift in the first quarter 2024 Mildest deliverable live steer projection. After the post report price break (on 10/23/) 2023 & 2024 live cattle futures prices  are trading even to or modestly under USDA projections. Traders may be uncomfortable with steer prices too far out of line with historical experience.

The historical price seasonal  for finished cattle is positive for traders holding long positions. Deliverable steer prices  have advanced more than declined from mid autumn into the winter period in 36 of the last 53 years. The feeder cattle historical seasonal remains negative per our previous post.