USDA Reports Large Feedlot Inventories

The USDA recently reported the largest March 1st inventory of cattle in feedlots ever. The 12.2 million head inventory followed a huge number of placements in the feedlots during February at 9.5 million head, 9% more than a year ago.

"It is at the high end of the range of what industry analysts were thinking the number was going to be," said Shayle Shagam, USDA livestock analyst, says continued drought in the southern plains was one factor in producers sending animals to feedlots sooner.

"The other factor, of course, is the relatively high prices of wheat."

The highest in years.

"And some producers may have thought about keeping the cattle on wheat a little bit longer, may have chosen to send those cattle to the feedlots to maximize the potential returns from the current prices of wheat."

This surge in feedlot inventories may cause a short-term weakness in cattle prices.  But once this surge is worked through, "supplies are going to be tightening and it's going to be [inaudible] for prices."

Which are already running ahead of a year ago.

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