Latest Cattle Inventory Report Shows Beef Cows Down 2% as Drought Forces Liquidation in the West 

July 26, 2021

Friday's report from USDA showed cattle inventory totaled 100.9 million head on July 1, 2021, down 2.0% from last year's report of 103.0 million head, but down 1.3% from USDA's new revised inventory of 102.2 million head for 2020. Total inventory was less than the 0.5% reduction expected by many. Beef cows on July 1, 2021, totaled 31.4 million head, down 2% from USDA's total of 32.05 million head for 2020 and also less than expected.

The national calf crop on July 1 totaled 35.1 million head, down 2% from last year's reported total of 35.8 million head, but only down 0.1% from USDA's revised total of 35.135 million head for 2020.

USDA cattle inventory reports have long-term implications and don't typically have much immediate price impact. However, Friday's cattle and calf inventories, compared to last year's reported totals, were less than expected and should have modest bullish influence on cattle prices, especially in the more distant futures months.

Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.3 million head on July 1, 2021. The inventory was 1% below July 1, 2020.

The inventory included 6.98 million steers and steer calves, down 1% from the previous year. This group accounted for 62% of the total inventory. Heifers and heifer calves accounted for 4.32 million head, down 2% from 2020.

Placements in feedlots during June totaled 1.67 million head, 7% below 2020. Net placements were 1.61 million head. During June, placements of cattle and calves weighing less than 600 pounds were 345,000 head, 600-699 pounds were 260,000 head, 700-799 pounds were 375,000 head, 800-899 pounds were 405,000 head, 900-999 pounds were 195,000 head, and 1,000 pounds and greater were 90,000 head.

Marketings of fed cattle during June totaled 2.02 million head, 3% above 2020.

The July 2021 COF report came in mostly as analysts projected, but there are some underlying discoveries that need highlighted.

First, it's quite impressive to note that marketings in June totaled 2,022,000 head. That's the largest placements have been in June since 2011, when marketings totaled 2,102,000 head. Even though the current live cattle market hasn't been favorable to feedlots in 2021 as prices cannot seem to surpass $125, if feedlots can regain market leverage there will be higher earnings to be made with demand as robust as it's been. The market's biggest limiting factor is packers buying cattle with time, week in and week out, so the current cash cattle market stands no chance of demanding higher prices as packers never have to commit to buying more than 50,000 to 75,000 head per week in the cash market.

Secondly, with severe drought conditions plaguing cattlemen in the West, placements have been a wild card for the market. More and more cows have been going to town as producers simply don't have the feed to carry them into fall. With these pairs coming to town and most being split and sold individually, the market has been curious as to where these calves are going. Friday's report didn't show a large increase in lightweight placements, and in all actuality the only divisions of placements where there was an increase year-over-year was of those weighing 700 to 799 pounds and those weighing 1,000 pounds or more.

Source: DTN