Last week's August Cattle on Feed report showed a surprise with 7% more cattle going into feedlots than last August, far more than what was expected. The large increase has left feedlot inventories 3% larger than last year.
"We've seen some very, very strong fed cattle prices that helped encourage feedlot operators to bid up the cost of feeder cattle, and thus we saw an increase in the placement number," USDA livestock analyst Shayle Shagam said. "There may have also been some opportunities to lock in corn price on expectations that they may be moving up further. That could have also possibly encouraged additional placements."
So in the short term when these cattle come out of feedlots early next year a bearish effect on prices, but will leave fewer cattle in feedlots and fewer cattle outside on grass to go into feedlots, which Shagam says should be very supportive of feeder cattle prices. Those prices could average close to $100 a hundredweight next year.