While cattle placements are declining, inventory has been increasing, with 11.97 million head, an increase from 2019 and from October, according to the USDA’s Nov. 1 Cattle on Feed Report.

“The 1.3 percent year-over-year increase is slightly less than analyst expectations of an average increase of 1.8 percent in feedlot inventories, but still within the expected range,” said Michael Nepveux, American Farm Bureau Federation (AFBF) economist.

The Cattle on Feed survey provides monthly estimates of the number of cattle being fed for slaughter. The USDA surveys feedlots of 1,000 head or more, representing 85 percent of all fed cattle. Cattle feeders provide data on inventory, placements, marketings and other disappearance.

Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 12 million head on Nov. 1, the report read. The inventory was 1 percent above Nov. 1, 2019, the highest Nov. 1 inventory since the series began in 1996. 

The report said placements in feedlots during October totaled 2.19 million head, 11 percent below 2019. Net placements were 2.13 million head. 

During October, placements of cattle and calves weighing less than 600 pounds were 570,000 head, 600-699 pounds were 495,000 head, 700-799 pounds were 465,000 head, 800-899 pounds were 387,000 head, 900-999 pounds were 185,000 head, and 1,000 pounds and greater were 90,000 head, the report said. 

Nepveux said large monthly carryover inventories helped to offset the drop in cattle placements.  

“They increased cattle on feed to 157,000 head more than the previous year, making this the most November inventory since the series began in 1996,” he said. “Typically, November continues the fall buildup of animals after September reduced numbers, and it looks as if we are seeing that seasonality play out. 

“After strong impacts from the pandemic in April and May, the number of cattle on feed has largely followed seasonal patterns,” he added. “But since, August has been running at more than recent-year levels.”

According to the USDA, the survey is conducted in the 16 largest cattle-feeding states. About 2,000 known cattle feeders with a capacity of 1,000 or more head are enumerated. Feedlots with 1,000 or more head capacity represent about 85 percent of all fed cattle in the U.S. 

The 16 largest states represent 98 percent of U.S. cattle on feed in lots of 1,000 head or more capacity; data are used in conjunction with Cattle Inventory data from January and July to obtain a measure of cattle on feed not included in the survey.

“As usual, Texas, Kansas and Nebraska led the way in total fed-cattle numbers, accounting for more than 7.8 million head, or about 65 percent of the total on-feed inventory in the country,” Nepveux said. 

“Texas continued to gain year-over-year, adding 1 percent relative to 2019,” he added. “Kansas and Nebraska saw moderately greater gains, adding 4 percent and 2 percent, respectively.”

As the fourth largest cattle-producing state based on sales, Iowa cattle and calves on feed for the slaughter market feedlots with a capacity of 1,000 or more head totaled 620,000 head as of Nov. 1, the report said. 

“Cattle and calves on feed for the slaughter market in all Iowa feedlots totaled 1,120,000 head, up 2 percent from last month but down 6 percent from last year,” the report said. “Placements of cattle and calves in Iowa feedlots with a capacity of 1,000 or more head during October totaled 105,000 head, up 46 percent from September, but down 8 percent from last year.”

In addition, Iowa feedlots with a capacity of less than 1,000 head placed 68,000 head, up 11 percent from September, but down 44 percent from last year. Placements for all feedlots in Iowa totaled 173,000 head, up 30 percent from September, but down 27 percent from last year.  

The report said marketings of U.S. fed cattle during October totaled 1.87 million head, slightly below 2019. Other disappearance totaled 63,000 head during October, 7 percent above 2019.

“Total inventories are an important component of the report. But other key factors include placements – new animals being placed on feed – and marketings – animals being taken off feed and sold for slaughter,” Nepveux said. 

“Coming in at 11 percent less than 2019, placements in October decreased to less than the average analyst expectation of an 8.9 percent decrease,” he added. “The placement number was at the smaller end of the range of expectations, coming in at slightly more than the minimum forecast of a 12.7 percent decrease.” 

He said the relatively wide range of forecasts for placements – about 8 percent – highlights the uncertainty that can exist in forecasting that specific variable. 

“Normal indicators such as feeder-cattle imports from Mexico and auction volumes send mixed signals,” he said.

He said a large driver of the pullback in placements is the fact that October 2019 placements were the greatest in almost a decade. 

“Placements have been running ahead of year-ago levels since they recovered after declines in April and May at the height of the pandemic,” he said. “In October, historically the peak month for placements, placements clocked in at 2.192 million head. 

“That bucks normal trends and comes in at less than September’s placements of 2.227 million head,” he added. “Marketings came in at 0.1 percent less than the previous year. That’s slightly less than analyst expectations of 0.2 percent more than year-ago levels, but well within the expected range and not a surprise. The 1.873 million head that were marketed in October is about even with 2019 levels, even though October 2020 had one less slaughter day for the month.”

He said the Nov. 1 Cattle on Feed Report is considered relatively neutral to bullish. 

“An 11 percent decline in placements is bullish for future supplies of fed cattle, but that was widely expected by the industry,” he said. “The overall supply of cattle on feed increased moderately through 2019, and the number of animals marketed throughout October is even with a year ago.” 

Scott Bennett, AFBF congressional relations director, said the near-term future will be dictated by how COVID-19 impacts the supply chain.

“This report would be considered neutral to bullish,” he said. “Looking into the future, the big question mark is how much a resurgence of COVID-19 affects packing capacity. While we do not anticipate it to be as challenging as it was this spring, the risks of plant closures still linger in the air.”