Low Inventory Leads to Uncertainty in Cattle Markets

A pair of recent market reports paint a picture of cattle on feed supplies remaining steady even as cash cattle prices moved higher. Bernt Nelson, an economist for the American Farm Bureau Federation, says the Cattle on Feed report is a good indicator of what’s coming in the market.

"A lot of that has to do with kind of what's been happening with our cattle on feed numbers," Nelson said. "And I think it's important for individuals to remember, farmers to remember that our cattle on feed numbers currently are not really bullish, but there are some things happening in there that can kind of lead people down another direction."

Nelson said that despite higher cattle supplies, overall market conditions mean that cash prices aren’t necessarily going down.

"Overall, cattle on feed came in at 11.6 million head. Now this is pretty close to where things were at this point last year. Placements were down around two percent. Marketings were up around two percent. There are a lot of fed cattle on the market right now," Nelson said. "There's also good packing margin occurring right now. Having a lot of those cattle available, typically when we think of higher supplies, we think of lower cash prices, but having those packer margins a little bit higher right now has allowed them to kind of bid for that."

Nelson said that these continually high retail prices could eventually lead to consumers shifting demand away from cattle to other protein options like chicken and pork.