USDA will issue on Friday, September 21, its monthly update of feedlot inventories as of September 1. Analysts on average expect the latest survey to show that total cattle on feed as of September 1 were at about the same level as a year ago. However, there is a large range in pre-report estimates, reflecting divergent view s as to the pace of cattle placements during August. For the most part, analysts expect placements to be lower than last year. On average the expectation is for a 7.3% reduction in the total number of cattle placed on feed. If correct, this would imply that feedlots in August placed about 164,000 fewer animals on feed than a CME: Lower placements expected with fewer feeders availableyear ago and about 81,000 head fewer than the August average in the past five years. The reduction in placements is in part due to the lack of feeder cattle availability (smaller calf crop  in 2012). Also, comparisons to last year are somewhat skewed by the drought impacts in 2011 . Last year, significant drought conditions in the Southern Plains pushed a lot of lightweight calves onto feedlots. While this year producers also struggled with drought conditions, the situation in a number of areas was better than a year ago. The surge in grain prices also is expected to have had a significant impact on the ability/willingness of feedlots to place feeders, especially lightweight calves that require more time on feed. December corn prices hovered in the $8.00 - $8.25 range for much of August, with other feeds also at all time record highs. In this environment, some analysts clearly think that we could see even more dramatic reductions in August placements, possibly down 10-15% from year ago levels. Feedlots have been steadily reducing the number of cattle placed on feed in recent months, slowly drawing down total inventories. Including the expected decline in August, year to date feedlot placements are down about half a million head or 3.4% from year ago levels. The reduction in placements is expected to limit cattle availability going into the holiday season, with cattle slaughter expected to be down as much as 5% from last year (lower fed and non fed cattle slaughter).

Cattle marketings in August were lower than a year ago. Analysts on average expect marketings to be down about 1.5% compared to August 2011. There were 23 marketing days this year, the same as a year ago. The estimated steer/heifer slaughter in August was 2.353 million head, about 2% lower than a year ago (based on daily USDA data). The slaughter  numbers are higher than what the feedlot survey shows because the survey only covers feedlots with capacity of 1000 head or more. For a period of time, we noted a significant discrepancy between the survey data and what the slaughter numbers indicated, a likely result of consolidation in the feedlot business. It will be interesting to see if the slaughter and feedlot numbers start agreeing again. In all, the feedlot survey is expected to show that feedlot inventories are getting tighter. With feed costs sharply higher, this trend is likely to continue in 2013 as producers seek to add more weight to cattle outside of feedlots and feedlot operators struggle to bring a margin back in their business.