July 23 Weekly Update

7/20 – In Friday’s Cattle on Feed Report, the USDA said new placements onto feedlots in June were up 1.3%, and that the July 1 feedlot inventory at 11.3M head was 4.1% above a year-ago and the highest July inventory on record. Beef supplies are up, but not nearly as much as expected. In Jan, the USDA had forecast 27.28B pounds of beef for 2018, up 5.4% from 2017. That projection is now down to 27.15B and a 3.7% increase. More importantly, the number of heifers on feedlots is up 8% from last year and heifers now account for 36.8% of feedlot inventories. Cattle analysts say an increase in heifer liquidation to above 36% indicates a turning point in the cattle cycle and a future reduction in herd numbers. Beef output is forecast to be up 2.0 in 2019, but further YOY increases beyond 2019 will be dependent on weight increases as growth in herd numbers fades.