Peel: Different Feedlot Dynamics in 2023
The final USDA Cattle on Feed report for the year shows that feedlot inventories continue to decrease. The December 1 total of cattle in feedlots was 11.673 million head, down 2.6 percent year over year and the third consecutive monthly year over year decrease in 2022 (Figure 1). November placements were down 2.1 percent year over year; a bit larger than expected, but still down for the third consecutive month. Feedlot marketings in November were about as expected, up 1.2 percent year over year.
Drought pushed more cattle into feedlots earlier this year and kept feedlot totals higher for longer. Monthly inventories from February through June of 2022 were not only higher year over year but were at record monthly levels in the cattle on feed data series that began in 1996.
Figure 2 shows the seasonal variation in feedlot inventories in recent years. Feedlot inventories typically peak in the late fall or winter and reach a seasonal low in late summer/early fall. The five-year average from 2016-2020 in Figure 1 (red line) shows that feedlot numbers peak in December on average and are seasonally low in September. However, in 2021 and 2022, the seasonal peak has been in February with the low in August (Figure 1). In the past five years, the variation from the seasonal peak to the seasonal low has been about 890,000 head, or about 8 percent of the average annual feedlot total.
Figures 1 and 2 may also be showing changes that will be very important in the coming year. Feedlot inventories decreased from November to December. This may signal that the seasonal peak is already in place, although it is too early to be sure. The last time that December feedlot inventories were lower than November occurred in 2016. In that instance, feedlot inventories decreased in December and January before jumping higher to a belated peak in June 2017. I believe it is unlikely that feedlot inventories will move higher anytime in 2023 and the November 2022 total may be the peak for many months. Time will tell.
