Heifers Impact on Cattle Inventory

By Andi Anderson

The "More Heifers Supporting Feedlot Inventory" report discusses the findings from the latest Cattle on Feed Report, which revealed some notable trends and implications for the cattle market.

• Increase in Feedlot Inventory: The report noted a slight (0.6 percent) increase in feedlot inventory from the previous year. This is surprising given the current setting of tighter supplies and smaller calf crops.
• Placements of Cattle on Feed: Placements of cattle on feed were up by approximately 6 percent. This increase was driven by higher placements of cattle weighing between 700 and 900 pounds.
• Historical Comparison: The 11.6 million head of cattle on feed is the second-highest October 1 total since 1996. It also marked the first time in 2023 that feedlot inventories were above year-ago levels.
• Strong Number of Heifers: The report highlights that 40 percent of feedlot inventories were heifers, which is the highest percentage in over 20 years. This indicates that producers are sending a significant number of heifers to feedlots instead of retaining them for reproduction.
• Short-Term and Long-Term Implications: The increase in heifers on feed is seen as having both short-term and long-term implications. In the short term, it may boost inventories, potentially negatively affecting prices. However, in the long term, the reduced number of heifers retained for reproduction suggests a smaller calf crop next year, which could support higher price levels.
• Herd Expansion Discussion: The report suggests that the findings shut down any ideas of herd expansion happening in 2023. Instead, the discussion is expected to shift toward whether expansion will occur in 2024.
• Market Prices and Drought Conditions: The increase in cattle placements is attributed to producers selling cattle to take advantage of strong markets and, in some cases, being forced to sell cattle earlier than expected due to expanding drought conditions in certain areas, especially in the Southeast.
• Price Expectations: The report notes that strong market prices have not yet reflected herd rebuilding efforts. The rebuilding phase typically involves holding back more heifers, leading to fewer heifers being sold as feeder cattle. Combined with smaller calf crops, this could lead to tighter feeder cattle supplies, which, in turn, could provide strong supply-side support for prices.

The report highlights the complexity of factors influencing the cattle market, including the balance between short-term and long-term considerations, the role of heifers in inventory management, and the impact of drought conditions on cattle placements. These dynamics will shape the trajectory of cattle prices and the potential for herd expansion in the coming years.

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