Last week, USDA released both its biannual U.S. cattle inventory report showing U.S. cattle totals as of July 1 and its monthly Cattle on Feed report. The reports provide inventory data for the nation’s cattle herd, including estimates of the
Overall, the July cattle inventory report does not show any dramatic changes in the trajectory of the cattle industry at this point in the year. The COVID-19-induced backlog of cattle does make interpreting the numbers in this report a bit more challenging. As of July 1, all cattle and calves in the U.S. totaled 103 million head, slightly above the 102.9 million head reported for July 1, 2019. Of that inventory, all cows and heifers that have calved totaled 41.1 million head. Beef cows dropped slightly from last year, coming in at 32.05 million head compared to 32.3 million head in 2019, while milk cows were up by 50,000 head over 2019. Both steers and heifers weighing 500 pounds and over were up from 2019, with heifers increasing by 100,000 head and steers increasing by 300,000 head. These numbers tell us that the beef heard is still contracting and, based on placements noted in the report, likely will not expand any time soon. Overall, this report, which was mostly in line with analyst expectations, does not show a dramatic increase in liquidation of the herd as a result of COVID-19. It does point to a continued slow tightening of the cattle inventory.
Cattle on Feed Report
Similar to the inventory report, the Cattle on Feed report came in relatively close to analyst expectations. This report showed a total inventory of 11.438 million head on feed in the United States on July 1. This slight year-over-year decrease is right in line with analysts’ expectations of an average decrease of 0.1% in feedlot inventories. This July inventory is the second-highest July 1 inventory since the series began in 1996, coming in only below 2019.
While total inventories are an important component of the report, other key factors include placements (new animals being
One uncertainty hanging over the industry is the status of feedlots under the backlog of fed cattle that developed during the disruptions at the slaughter plants. The estimates of cattle on feed over 120 days is still very large, but the number appears to be decreasing (Figure 3). This indicates that the backlog is decreasing, but it will still be a little while before feedlots are current because a large number of cattle remain backed up in the system.
These two reports largely fell in line with expectations and did not result in any large market reactions, a refreshing result in an era wracked with COVID-19 uncertainty. The cattle inventory is largely in line with year-ago levels, as are total cattle on feed. Though it will still be a few months before the feedlot sector is current, there is a slight decline in the backlog from last month.