A continued tightening of the US cattle inventory to start the year. USDA livestock analyst Mike McConnell says, for the January cattle on feed report…

“I think a major story that continues when it comes to cattle on feed is that placement still remains strong, relatively speaking, even though they’re down slightly from a year ago, this is coming on the tails of a pretty strong run of placements in the third and fourth quarters. USDA estimated that as of January 1, 11.823 million head of cattle were on feedlots larger than 1000 head, which is 1% below the levels last year. During the month of December, 1.64 million head of cattle were placed in feedlots, which is 3% lower than a year ago, and 1.74 million head were marketed, which is 1% more than a year ago. (However) There’s still robust demand for cattle and for beef, as exhibited by the 1% increase in marketing during the month of September. That’s been reflective as well in the price of fed cattle, which has remained strong, and in fact, has crossed over the $200 per hundredweight mark the month of January, looking at the five area fed steer price.”

Another continuing trend, lower year over year, heifer placements for the second consecutive quarter.

“This report showed that as of January 1, heifers and heifer calves accounted for about 39% of feedlot inventories. This is down slightly from where it was last year, although it’s still, relatively speaking, on the higher end of historical norms, but it has been continuing a trend that at least we’ve seen in the two quarterly reports, where the percentage of heifers in feedlots is a little bit lower than what it was the year before.”

So Mike McConnell, what might this indicate?

“That might be signaling, to some degree, the fact that perhaps cow calf producers are retaining their female animals for breeding, rather than marketing their heifers for feed lots. With the strong feeder cattle prices that we’ve seen recently, there’s still a pretty strong incentive for producers to market their heifers in the feeder market. (In summary) The main takeaways from this report are kind of continuation of fairly steady inventories of cattle on feed due to large placements that we’ve seen throughout much of 2024. With that being said, markings continue to also continue at a pretty robust pace. And really what we’re looking at is not only a high inventory level, but also a high share of those inventories that have been on feed now for over 150 days, which means that they should be market ready in the coming weeks, essentially. So there should be a large supply of fed cattle and feed lots ready for marketing as we hit the first quarter of 2025.”