US Cattle Glut Hits Prices, but Lower Placements May Signal Turnaround

03 December 2020

The US cattle industry continues to be weighed down by backlogs at slaughterhouses, but fewer placements could signal a turnaround. 

 

Cattle and calves on feed for the US slaughter market totaled 12.0 million head as of Nov. 1, up 1% from a year earlier and the highest reading for the month since the data series began in 1996. The high tally, a measure of cattle on feedlots of 1,000 or more head, is largely a result of slaughterhouse backlogs caused by COVID-19’s disruptions to food supply chains in the spring. Such large inventories will continue to weigh on front-month live cattle futures.

 

But a deeper dive into the data—particularly placements (new animals being placed on feed)—suggests the cattle industry may be beginning to work through the glut. (Watch a recording of Gro’s webinar “Working Through the COVID Cattle Glut.”) 

 

Placements in feedlots during October totaled 2.19 million head, which is 11% lower than a year earlier. It was the first year-over-year decline in placements since the current cattle glut began in the spring. October placements, historically the peak month for placements, also bucked the normal trend by coming in lower than September’s 2.23 million head. Cattle placements likely hit seasonal highs in September due to drought conditions in many areas, which forced producers to move cattle from pasture into feedlots.

 

While an 11% decline in placements could be bullish for future supplies of fed cattle, it remains to be seen how the current resurgence in COVID-19 cases affects the industry this winter. The packing industry should be better equipped to manage the challenge after the crash course this past spring, but there is still risk that plants may have to close. 

 

Gro’s extensive network of data covering supply, demand, and wholesale pricing are important tools in analyzing and forecasting the complex world of meat proteins.

 

This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.

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