The October Cattle on Feed report from the USDA revealed that feedlot inventories remain relatively stable year-over-year, despite ongoing declines in overall cattle inventories since 2019. Heifer placements and imports, along with shifts in marketings and feedlot dynamics, provide insights into the current cattle cycle and future market expectations.
Key Insights:
- Stable Feedlot Inventory:
- The October 1 feedlot inventory was estimated at 11.6 million head, nearly unchanged from last year.
- Feedlot placements in September were 2% lower year-over-year, totaling 2.1 million head, while marketings increased by 2% to 1.698 million head.
- Placement vs. Marketing Trends:
- Net placements to marketings exceeded the 10-year average for August and September by more than one standard deviation, contributing to higher percentages of cattle on feed for over 150 days.
- This trend indicates an increased supply of fed steers and heifers likely to enter the market in the coming months.
- Heifer Dynamics:
- For the first time since July 1, 2023, the number of heifers on feed is slightly below last year, declining by approximately 1%.
- However, heifers on feed remain above the average levels for current and previous herd contraction phases, reflecting strong feedlot demand.
- During the 2007–2014 contraction, heifers on feed for October 1 were, on average, 13% lower than current levels.
- Impact of Heifer Imports:
- Third-quarter heifer imports from Mexico were up 61% compared to the same period last year, adding over 45,000 head.
- Although September imports declined slightly (down 5% year-over-year), the influx of heifers from Mexico likely supported October feedlot inventories.
The October report reflects a complex interplay of factors maintaining stable feedlot inventories, including market demand, import dynamics, and placement trends. While feedlot numbers remain robust, heifer retention does not appear to be a dominant factor in current herd management strategies, and imported heifers are playing a significant role in sustaining inventories. These factors are expected to shape the fed cattle market in the coming quarters.
