Nalivka: Where the Cattle Inventory is Headed
By John Nalivka, Drovers
April 30, 2021
Since the beginning of March, any year-over-year comparison of cattle slaughter and feedlot inventory flow has been interesting given the distortions in the flow of cattle resulting from COVID and plant shutdowns and slowdowns last year. And, it’s likely to remain that way into the latter part of this year.
While plants brought throughput utilization back closer to capacity by early June last year, the backlog had to be worked through. At the same time, feedlot inventories were disrupted during March and April with many cattle typically bound for the feedlot, but instead going to grass in response to a sharply lower market.
The beef market has definitely supported beef exports, but at the same time, significantly increased corn and soybean exports to China as they rebuild their hog herd, have pushed feed costs sharply higher. We are now back to basic feedlot economics – high grain prices and rising breakeven prices are offset by lower feeder cattle bids. That is simply managing 70% of the cost.
Consequently, the industry finds itself in a situation where increased red meat and grain exports together are a mixed bag. And this situation will be amplified if weather becomes a factor.
As I began to evaluate U.S. cattle inventory numbers at the beginning of 2022, I came to the conclusion...