Following USDA’s October Cattle on Feed report, this column highlighted some of the pertinent implications to follow. Specifically, the discussion focused on the limited placements during the month of September. The column included the following explanation:  

With that reality, the pre-report expectations for November placements were clearly biased toward compensation – that is, November would see more feedyard purchasing activity because of the relative slowness in September and October. Those expectations proved accurate. The report indicated 1.843 million head were placed in November – up 241,000 head, or 15%, versus last year. 

However, as highlighted in this week’s graph, the three-month total (September, October, November) tells a broader story that has implications going into 2017. That is, the fall run totals for 2016 equal 5.91 million head – that’s only 80,000 bigger than last year, and that’s against a slow 2015 due to the last year’s sharp market downturn. Thus, for more context, a comparison to 2010-2014 is provided in the graph.

As noted previously in this column, feedyards are operating in an environment of bigger supply. Recall the Jan. 1 feeder cattle inventory outside feedlots was 1.3 million head larger than 2015. Total placements through August were up 834,000 head versus 2015. Tack on the additional 80,000 head during this year’s fall run (versus last year’s pace) and the difference totals to only 914,000 head.

In other words, there’s still about 400,000 head of cattle out on grass or in small grow yards waiting to be placed. Not to mention, we calved approximately 1 million more cows in 2016 compared with 2015.  

It appears there are plenty of cattle out there that still need to make their way to the feedlot. That reality has several implications:

Are you carrying over any feeder cattle into 2017? If so, what are your marketing plans for the coming year? Are you watching this carefully or just using up existing feed? How do you expect all this will play out from a supply flow in the coming year? Leave your thoughts in the comments section below.