Author: Josh Maples

The February Cattle on Feed report was released this past Friday afternoon and reported 11.7 million head of cattle in feedlots on February 1^st. This was a 0.7 percent decrease from February 1, 2024. Marketings were up 1.4 percent year-over-year. There were no big surprises in the report relative to pre-report expectations, but there were some interesting points in the report. 

Placements of cattle into feedlots during January were up 1.7 percent above January 2024. Weather and winter storms delayed January 2024 placements, so the increase shown for 2025 is partially driven by a lower 2024 number. In 2024, placements were higher in February than they were in January which was the first time that had occurred since 1996. We have not seen those same challenges so far in 2025, but February placements are likely to be impacted by the lingering impacts of the Mexico cattle import ban. 

A regional look at the data implies an impact of the Mexico import ban on January placements. January 2025 placements of cattle into feedlots in Texas were 50,000 head lower than a year ago which is a 14.5 percent decrease. This was offset by a 60,000 head (15.4 percent) increase in Kansas and a 30,000 head (5.9 percent) increase in Nebraska during January.  

The largest increase in placements was in the 700-799 pound weight range which were up 30,000 head (6.3 percent) from a year ago. Placements were up across all weight classes in Nebraska and Kansas and lower across all weight classes in Texas. Placements of cattle into Texas feedlots weighing less than 699 pounds were down 35,000 head during January compared to a year ago. 

The data mentioned above comes from feedlots with at least 1,000 head capacity. However, another interesting part of the February report is the detail about the distribution of cattle across feedlot sizes. There are 2,105 feedlots with at least 1,000 head feeding capacity. These feedlots housed 83 percent of cattle on feed as of January 1, 2025. The remaining 17 percent of cattle on feed were located across the 24,000 feedlots with a capacity of less than 1,000 head. Of the 1,000+ capacity feedlots, there were 80 that have a capacity of 50,000 head or more, and these were home to 35 percent of the total U.S. cattle on feed on January 1.

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Maples, Josh. “February Cattle on Feed.” Southern Ag Today 5(9.2). February 25, 2025. Permalink

In 2024, cattle markets remained strong, driven by declining cattle numbers—a trend consistent with expectations outlined at the start of the year. The ongoing cattle cycle began in 2014 and saw beef cow inventories peak in 2019 at 31.69 million head. Since then, inventories have declined at an annual rate of 2.3%. 

Cattle and calf prices continue their upward trajectory, ending the year on a high note. In the Southern Plains, prices for 500-600 pound steers have increased by approximately $40 per CWT from early October to mid-December. Contributing factors include recent rainfall in the region and a reduced number of calves, which have collectively helped to elevate calf prices. Additionally, the current import restrictions on feeder cattle from Mexico are likely providing some further support to prices, given that December is typically a peak month for imports. 

We also have a strong fed cattle market to finish the year.  Fed steer prices in the Southern Plains reached $195 in mid-December. Carcass weights remain very high compared to history. Steer dressed weights are near 960 pounds. Lower corn prices are supporting longer feeding periods, but there are typically seasonal declines in fed weights. It will be very interesting to watch cattle weights as 2025 begins.

2025 will begin as another year on the heels of herd contraction in the previous year. The USDA’s January 2025 Cattle Inventory Report is expected to confirm that cattle numbers did indeed decline in 2024. Weekly slaughter data from USDA support this projection. Year-to-date beef cow slaughter is down by 18%, but the implied cull rate—calculated as slaughter divided by inventories—remains at 10.2% for 2024, well above the that would indicate herd expansion. Heifer slaughter data also shows no signs of herd expansion. Year-to-date heifer slaughter is down 1.1%, with no evidence of heifer retention occurring at a rate sufficient to signal herd rebuilding.

Cattle market fundamentals at the close of 2024 offer plenty of bullish signals for 2025. Many producers remember the high prices in 2014-2015 as a cautionary tale of how quickly prices can come down after a run up. However, the current fundamentals are quite different than they were in 2015. By year two of the 2014-2015 high price environment, it was clear that herd expansion was occurring. Currently, there are no clear signs to suggest larger calf supplies anytime soon. While prices are high, they have not yet hit levels to persuade producers to expand. 2024 prices hit record levels as shown in the chart above. However, after adjusting for inflation using 2000 as the base year, the purchasing power from the 2024 producer revenues was still below 2014-2015. It could very well be that feeder cattle prices have not yet peaked and the market is beginning 2025 with more optimism. 

Happy New Year!

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Maples, Josh, and James Mitchell. “2024 Beef Cattle Market Review.” Southern Ag Today 4(53.2). December 31, 2024. Permalink

The January 2025 feeder cattle futures contract dropped roughly $25 per CWT from mid-July to mid-August. But, since early September, futures contract prices have rebounded about $15 per CWT. Points on the solid maroon line in the chart are the end of day futures contract prices from last Friday for each feeder cattle futures contract month. Points on the dotted black line are end of day prices back on September 6^th, after the big decline.  

The chart nicely illustrates seasonality within the futures market. Auction prices for 750-pound feeder cattle are typically lowest in the spring months when those calves are yearlings.  Futures prices reflect expectations of seasonal patterns too, but there are a few steps to thinking through the impact. 
 
First, it’s important to remember that feeder cattle futures prices are the “market’s” expectation of what the CME Feeder Cattle Index will be at the end of the contract month. The “market” is made of buyers and sellers trading the futures contract. The feeder cattle index is calculated from auction prices for 700-899 pound steers collected by USDA-AMS for a 12-state region in the middle of the U.S. (there are no states east of the Mississippi River included in the index). It is a 7-day rolling weighted average, so today’s index value is a weighted average of the auction prices over the past week. Most auctions only operate one day per week so the 7-day average catches sales during a week’s period.
 
How does seasonality fit into this? If prices are typically expected to be lower during certain months (i.e. seasonality), then the futures contract prices for those months will likely be lower because traders are “baking-in” the seasonality expectations. The chart above is a good example. Since these prices reflect 700-899 pound feeder steers, the market (futures traders) is expecting auction prices (the CME index) to be lower during the spring months before rising seasonally as summer approaches.

This exercise illustrates the importance of understanding how the value of your cattle correlates to futures market prices for risk management or for forecasting prices. Your cattle may not be 800-pound steers sold in that 12-state region. But if you know your cattle are usually $10 above or $10 below the futures market at sales time, then then you can still use the futures market’s expectations to forecast the expected value of your cattle and to participate in price risk management tools.

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Maples, Josh. “Feeder Cattle Futures Prices.” Southern Ag Today 4(46.2). November 12, 2024. Permalink

The latest USDA Cattle on Feed report was released Friday and showed placements of cattle into feedlots during August were 1.4 percent lower than during August 2023. Marketings of fed cattle out of feedlots were down about 3.5 percent from a year ago, partially due to one less business day in August 2024 than in August 2023. Both of these numbers were within pre-report expectations and will likely not be big market movers. 

Most of the decline in placements from a year ago occurred in placements of cattle weighing less than 800 pounds. Placements of cattle in this weight range were 3.4 percent lower while placements of cattle weighing more than 800 pounds were 1.4 percent higher. Placements in both Kansas and Nebraska were down about 3 percent while placements in Texas were down nearly 6 percent as compared to a year ago. Placements in Colorado were the exception and were up nearly 30 percent. 

Despite the lower placements, the total number of cattle in feedlots with more than 1,000 head capacity on September 1st was up 0.6 percent compared to a year ago. This continues the trend of cattle staying in feedlots longer. Total placements of cattle into feedlots during 2024 is down about 2 percent but longer feeding periods have reduced turnover and helped to keep inventory levels from fully reflecting the declining calf crop totals. 

Longer feeding periods are leading to higher cattle weights. The average dressed weight for federally inspected steers during August 2024 was 930 pounds. Assuming a dressing percentage of 62.5 percent, this suggests an average live weight of 1,488 pounds. This is the highest August steer dressed weight average on record, easily surpassing the 911-pound average during August 2020. Heifer dressed weights also hit an August record at 840 pounds on average. The higher dressed weights are offsetting much of the impact of lower cattle numbers on beef production. Total beef production in 2024 is now expected to be very close to beef production in 2023 despite fewer head processed.

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Maples, Josh. “Cattle on Feed and Record High August Fed Cattle Weights.” Southern Ag Today 4(39.2). September 24, 2024. Permalink

Two big USDA reports in the last week have boosted livestock prospects at the expense of corn prices.  The annual Acreage report included larger-than-expected corn acres which put downward pressure on corn prices. The report listed corn acres at 91.5 million acres which was 1.4 million acres higher than the March Prospective Plantings report projected. After corn prices surpassed $6 for the 2022/23 marketing year, prices fell below $5 for the current marketing year, and are projected to be closer to $4 for the 2024/2025 marketing year. 
 
While higher than previously projected, corn acres will be slightly lower than 2023 totals. However, good growing conditions are supporting higher yield expectations when compared to 2023. The latest WASDE report included a yield estimate of 181 bushels per acre which would be higher than the 177.3 from a year ago. Stronger yields could lead to corn production for 2024 not being far off from the 2023 total. 
 
Also released last week was USDA’s Quarterly Grain Stocks Report which includes estimates of corn stocks held on farms and in elevators. Total corn stocks on June 1^st were estimated to be 5 billion bushels, up 22 percent from 2023 and the highest June 1 total since 2020. Most of these stocks are still being held on farms as farmers await better pricing opportunities. But, the old common problem arises of holding stocks while supplies grow and prices continue to fall.  On farm corn stocks were just over 3 billion bushels, which is roughly 800 million more than last year and is the largest June 1 total since 1988. 
 
Overall, the news is positive for livestock producers. The simple takeaway is that corn production and stocks are expected to be plentiful, and corn prices are back to lower levels after surging a few years ago. This should continue to bring relief to livestock feed costs and reduce the cost of gain for cattle.  This year’s corn crop is not in the bin yet, so production risks remain that could influence price. Falling corn prices should continue to push calf prices further into record territory.  Returns to hog and poultry production will get a much needed boost from lower feed costs.

Maples, Josh, and David Anderson. “Falling Corn Prices, Higher Calf Prices.” Southern Ag Today 4(28.2). July 9, 2024. Permalink