The November USDA-NASS Cattle on Feed report was well anticipated and should not cause big surprises in the market. Feedlot placements in October were 2.245 million head, 102.4 percent of last year. Marketings in October were 1.788 million head, 95.5 percent of one year ago.There was one less business day in October 2021 compared to last year, so average daily marketings were equal to last year. The November 1 on-feed total was 11.948 million head, 99.8 percent of last year. Though the November feedlot inventory was only fractionally lower than last year, it does make the fifth consecutive month of year over year declines in feedlot totals.

Average fed steers and heifer prices were reported at $134-135/cwt. for the end of the week prior to Thanksgiving. After staying in the lower $120s since June, fed prices moved above $125/cwt. in the last week of October and pushed above $130 by the second week of November. Market-ready supplies of fed cattle have tightened and packers are actively chasing cattle for the first time in many months. 

Prices for big feeder cattle have increased seasonally from September to November. Average Oklahoma auction prices for 800-850 pound, M/L, No. 1steers have increased nearly 6 percent from September and are up about 21 percent from the beginning of the year. This increase in feeder prices reflects generally tighter feeder cattle supplies and fed market optimism as reflected in Live Cattle futures prices in 2022.  This is despite sharply higher feedlot cost of gain, up 33 percent from January to September in Kansas feedlot surveys. Stocker calf prices are up sharply from early October lows.  Prices for 450-500 pound, M/L, No. 1 steers are up 13 percent in the last seven weeks and are nearly 8 percent higher since the beginning of the year.

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Oklahoma auction totals for feeder cattle are down 10.8 percent from last year for the first half of November. However, year over year comparisons are complicated by the disruptions last year of the late October ice storm, which resulted in severely reduced auction volumes the last week of October 2020 and larger volumes in November to catch up. Thus, total feeder volumes at auction are up 8.1 percent year over year since early October. 

Cull cow prices have been somewhat volatile this fall as support from strong lean meat markets wrestles with seasonal pressure and elevated cow slaughter totals. Average boning cow prices in Oklahoma have averaged 15 percent higher year over year in October and November, but with considerable week to week volatility. Beef cow slaughter is 8.7 percent higher year over year for the year to date.  This fall the year over year increases have been smaller, up 6.5 percent in the last eight weeks of data, indicating that some of the normal fall culling likely occurred earlier in the year due to drought.

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In general, cattle prices are higher now compared to last year and are expected to continue improving in 2022. Live and Feeder futures have priced in considerable optimism for 2022. However, plenty of challenges remain for cattle producers with continued drought, higher input prices, supply chain disruptions and considerable short-term macroeconomic uncertainty. It will still be a bumpy ride, but producers can focus more on managing costs with cattle prices generally moving higher.

Source: Derrell Peel, Oklahoma State University, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.