The USDA released its June Cattle on Feed report on Thursday (early release due to the Juneteenth holiday on Friday). The agency reported that feeder cattle placements in May totaled 1.704 million head, down 9.7 percent year-over-year. That was a flip from being up 6 percent in April. Placements were also nearly unchanged for a second consecutive month.

Despite the lighter placement, the cattle feedlot inventory rose by 2 percent to 11.68 million head. The feedlot inventory has been rising on a month-over-month basis since the year began, which counters seasonal trends.

That has largely been due to rapidly declining fed cattle marketings. The USDA reported that markets totaled 1.55 million head in May, down 11 percent year-over-year. That was the lowest for the month since the pandemic in 2020. Aside from 2020, that was the lowest May marketing month in decades.

Beef packers continued to limit purchases due to record prices, leading to higher dressed weights and days on feed. The average dressed cattle weight last week was at 897 pounds, down from 901 pounds the previous week, but up from 863 pounds a year ago.

August live cattle futures traded $2.22 lower on Thursday to close at $246.62 per cwt. Prices are just within $5 of their contract highs, and the recent pullback on lighter volume suggests higher prices could be in the cards. August feeders traded 82 cents lower to close at $366.60.

Overall, Thursday’s report leaned bullish on the surface due to the feedlot placements and herd numbers falling below the average market guess.

The question will be whether the feedlot herd continues to expand when the cattle herd begins to expand. Eventually, we can get into an abundance of supply at some point in the future, especially once we begin to import cattle from Mexico again.

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