A bullish April cattle on feed report

Kenny Burdine, University of Kentucky

Cattle on feed reports have not been especially kind to the cattle complex in recent months. Despite fewer cows and a smaller calf crop, on-feed inventories have been running above year-ago levels. Over the last several months, feeder cattle placements have been higher than most analysts would have expected. Weather and high prices likely encouraged some early placements in some regions going back to fall. At the same time, marketings have seemed to be relatively slow. I suspect this has been partly due to expensive feeder cattle and cheaper feed. This combination tends to encourage adding more weight to current feedlot inventory and rising harvest weights seem to be supporting this hypothesis.

This brings us to the April Cattle on Feed report, which came at the end of a week when cattle markets had gained back a portion of what had been lost since late March. The number that stood out the most was the estimate of March placements, which came in 246,000 head lower than March of 2023. I don’t want to read too much into a single report, but this 12% decrease is significant and came in below all the pre-report estimates I had seen. Sometimes it is beneficial to take a bit longer view on something like this. If I look at the entire first quarter, placements were down 4% for 2024. This is a number that seems to make sense given feeder cattle supplies. It’s also worth noting that the first quarter of 2024 included February 29th due to 2024 being a leap year.

The April report is also one of the quarterly reports where an estimate is made of the on-feed breakdown between steers and heifers. This can provide some indication of heifer retention for breeding purposes and will be especially important this year as we may not have the July Cattle Inventory report. As of April 1, heifers and heifer calves accounted for 38.5% of on-feed inventory. Heifers accounted for 40% of on-feed inventory in October of last year and 39.7% in January of this year. The fact that the share of heifers on feed is decreasing does bear watching in the coming months, but still does not point to significant heifer retention. If one goes back and examines the last expansionary period, the heifer percentage was below 35% for ten straight quarters – from the first quarter of 2015 to the second quarter of 2017.

Put simply, the most recent cattle of feed report was the most bullish that we have gotten in a good while. Despite the fact that total on feed numbers remain above 2023 levels, they were still below trade expectations. Sharply lower placements seemed to confirm that feeder cattle supplies are very tight. And there is still no evidence that large numbers of heifers are being held for replacement purposes. While the volatility in the cattle markets is likely to stay, the supply picture remains encouraging for feeder cattle markets.

The Markets

Prices for feeder cattle and calves were mixed last week, but remain well above 2023. Fed cattle and boxed beef were down slightly. Live and feeder cattle futures prices improved last week, while corn futures were off a bit.

Pasture Conditions