Source: CIH
Both cattle and corn futures moved higher over the second half of September with a firm tone in both markets. USDA’s Cattle on Feed report showed total on-feed inventory as of September 1st at 11.198 million head, up 0.64% from last year and in line with pre-report expectations. August placements of 1.975 million head were down 1.4% from a year ago and likewise within the range of analysts’ expectations. While cattle placements were expected to decline given a lower calf crop and cattle inventory, deteriorating pasture conditions over the summer portend a potential increase in placements in upcoming reports. Drought conditions have worsened in some key areas including the Texas Panhandle, Oklahoma, the Eastern Corn Belt, and the western part of the Dakotas. Some 35% of cattle are currently located in areas experiencing drought with 10% in areas of more extreme drought conditions compared to less than 10% and 3%, respectively, earlier this spring. USDA’s NASS September Livestock Slaughter report detailed statistics through August reflecting commercial and federally inspected YTD beef production at 17.9 and 17.6 billion pounds, respectively, down 0.6% and 0.5% from last year. Cow slaughter through August at 3.8 million head is down 14.8% from a year ago, although this may pick up as drought conditions worsen. YTD average dressed weight for all cattle was reported at 845 pounds, up 3.1% from 2023 which has helped to offset the decline in slaughter totals. USDA also reported total frozen beef Cold Storage inventories of 395.186 million pounds at the end of August, down 1.8% from July but essentially unchanged from a year ago. Our clients continue to evaluate strategic adjustments to existing cattle inventory and corn feed hedges as prices rise.
