The latest Cattle on Feed report puts November 1 feedlot inventories at 10.63 million head, just fractionally above the year ago total of 10.59 million head. This slight increase in feedlot inventories over last year ends a string of 26 consecutive months of monthly year over year decreases in feedlot inventories. Feedlot inventories are slightly above year ago levels despite indications that total feeder cattle supplies continue to tighten. Turning fewer cattle into larger feedlot inventories is the result of feedlot decisions about both placements and marketings.
October feedlot placements were slightly less than one percent below year ago levels. Placements were slightly larger than pre-report expectations and reflect, in part, a sharp increase in Canadian feeder cattle imports in October. Placements were up for 800+ pound animals and lower for all other weight categories. The largest year over year decrease in placements was for the traditional 700-799 pound weight category. For the last five months, which captures most of the current feedlot inventory, placements of 700-799 pounds feeders has been a smaller percentage of placements compared to last year, while all other weight categories have been a larger percentage. In other words, feedlots have placed heavy feeders (>800 pounds) to the extent available and otherwise have been placing lighter weight cattle that will stay on feed longer thereby maintaining feedlot inventories.
Feedlots have also boosted feedlot inventories by reducing the marketing rate the past few months. October marketings were 92 percent of last year, close to pre-report expectations. Feedlot marketings as a percent of cattle on feed has been at or below year ago levels all year and lower than the five year average marketing rate since February, with the exception of October. Net placements as a percent of marketings have been higher than year ago levels since July and more sharply higher in October. The slow feedlot marketing rate is reflected in increased steer and heifer carcass weights in recent weeks, currently at record levels of 903 pounds for steers and 830 pounds for heifers, both up 26 pounds from last year. Kansas feedlot data confirms that the combination of lightweight placements and heavier marketing weights is slowing down feedlot turnover rates. Days on feed for steers and heifers were up roughly 15 days in August and 21 days in September. Feedlots have had the tacit support of packers to reduce marketing rates as packers have reduced slaughter rates in response to wholesale beef values that have not kept pace with fed cattle prices this fall. Both feedlots and packers have a short term incentive to increase carcass weights in the face of limited animal numbers. Decreasing feed costs have also supported feedlot decisions to feed lighter cattle and to feed cattle to heavier weights. It is unlikely that carcass weights can continue to increase on a year over year basis. The slower marketing rates that supported the transition to heavy carcass weights will increase to more typical marketing rates in coming months.