How Is Drought Impacting Cattle Supplies?
Recent reports from the USDA reveal current trends in the cattle markets. American Farm Bureau Federation Economist Bernt Nelson, called the recent report bullish, with total cattle on feed coming in right around 11.4 million, down 1% year-over-year. He noted placements are a little bit over two million head, off 4% from 2021’s numbers.
Nelson said placements were down the most in drought-stricken states.
“This is likely due to some tighter calf supplies along with higher feed and input costs amplified by the drought conditions. We've seen marketings for fed cattle totaling 1.86 million head for September, this is four percent above this time in 2021. Now, when we really see marketing high and placements become lower over a longer drawn-out period of time, this really signals that lower cattle supplies are in the future.”
Additionally, USDA’s Livestock Slaughter Report shows higher beef slaughter numbers.
“So, on October 26th, we had 129,000 head processed. So, what we're seeing here is when the packer really starts trying to reach out and get a hold of these numbers ahead of time, this really tells you that they need to get their hands on cattle to meet the current demand situation," Nelson added. "When we see the supplies start to tighten up and we see demand kind of remaining consistent, we're going to see some upward support in prices.”
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