Feeder Cattle Economic Value

The USDA has estimated the January 1 U.S. feeder supply outside feedlots at roughly 200 thousand head less than available a year ago. We have scattered the 1st quarter feeder price as a function of the January 1 feeder supply. The point marked in red is the price and supply estimates provided by USDA.

Feeder futures have dropped sharply this winter and are trading at a discount to the USDA  forecast. We would expect a spring price rally based on current fundamentals.