In the Cattle Markets
Cattle-on-Feed report and thoughts on herd expansion.
November 4, 2024
by Glynn Tonsor, Kansas State University
On Friday, Oct. 25, the USDA National Agricultural Statistics Service (NASS) released the latest Cattle on Feed report. The Oct. 1 inventory was estimated at 11.60 million, on par with 2023. Placements in September were estimated at 2.16 million, down 2% from 2023. Marketings were estimated at 1.70 million, up 2% from 2023.
The inventory and marketing estimates were in line with public prereport estimates, while September placements came in on the higher end of expectations (down, but not down as much as most analysts projected). Taken as a whole, this report is not likely to be a market mover, while perhaps signaling some feeder cattle being pulled ahead for placement in September and/or current feeder-cattle supplies being larger than expected.
There indeed are multiple reasons “typical” producers are being rational in not yet pulling the expansion trigger.
The October Cattle on Feed report also contained an estimate of steer relative to heifer inventories. For Oct. 1, 2024, USDA estimates that 39.7% of feedlot inventories are heifers, which is nearly identical to the 40.0% estimated for Oct. 1, 2023. This reinforces ongoing signals that national breeding herd expansion has not been initiated.
I continue to expect the January Cattle Inventory report to indicate some moderate additional liquidation of the breeding herd, suggesting 2025 will have a lower calf crop. Across several talks I have made the past couple months, my herd expansion thesis has been that anecdotal examples of rebuilding may occur in 2025. Nationally, market-relevant levels of expansion would not begin until at least the summer of 2026. The recent bouts of dryness in the Midwest make me even more confident in this.
Moreover, recognition that while market-reported dollars-per-cow returns in 2024 are slated to be attractive for many producers, when put on an inflation-adjusted basis they have yet to exceed the memorable year of 2014.
Likewise, when one moves beyond a dollars-per-cow approach to investment and decision-making framing around percentage returns (ROI, return-on-investment %) reflecting elevated capital necessary to operate, attraction in expansion may be further tempered. While on balance I do envision heifer retention will occur nationally, starting in 2026 at the earliest, there indeed are multiple reasons “typical” producers are being rational in not yet pulling the expansion trigger. Implications clearly follow for calf crop size, and industry capacity utilization discussions will continue.
Editor’s note: Glynn Tonsor is a professor in the Department of Agricultural Economics at Kansas State University. This article is reprinted with permission from the Livestock Marketing Information Center, available online at https://www.lmic.info.
Angus Beef Bulletin EXTRA, Vol. 16, No. 11-A
Topics: Business , Marketing , Management , Feeder-Calf Marketing Guide
Publication: Angus Beef Bulletin
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