Placements were lower than those of the prior year and were exactly as anticipated. Pre-report expectations suggested placements would be 95.5% of the prior year, with a range of 91.5% to 98.0%. Actual placements during December were 95.5% at 1.704 million head.

Fed-cattle marketings were modestly softer than anticipated. Pre-report expectations anticipated marketings would be 99.3% of last year, with a range of 98.2% to 100.7%. Actual marketings during December were 99.1% of the prior year at 1.725 million head. The sharply colder winter weather has slowed animal performance and gains. Likewise, poor packer margins and softening of some beef product prices have not incentivized packers to play catch-up.

I have discussed in prior newsletters that cattle-on-feed inventories would likely continue to tighten from the peaks in 2022. The beginning of January saw an inventory of 11.930 million, modestly larger than the beginning of December’s inventory of 11.682 million head. This was modestly larger than the inventory for the beginning of November. But all of this was as expected. The pre-report survey suggested that the on-feed inventory would be 102.2% of last year, with a range of 101.4% to 102.5%. Actual inventories were 102.1% of the prior year. Weather is one cause. The others are the beef prices and downstream margins. Tighter supplies are in this market’s future, but we are not there yet. The changing fundamentals needed for this are strong marketings across several months and improvements in packer margins.

The inventory of cattle on feed more than 150 days was down in December, but it remained sharply larger than that of the prior five years. That strong increase occurred in October and persists. This long feed inventory of animals will certainly affect the fed cattle through the first quarter. Both cattle on feed more than 120 days and more than 90 days are sharply higher. All of these “on-feed days” are calculated and not in the report. However, the inventory-based outlook appears rather bearish.

The markets
What does the technical picture say? All cattle futures contracts have been in a rally since the sharp downward move from late September to early December. The steep downtrend in all contracts has been broken, and this is a buy, or a bullish, signal. Support is also set at the low prices since last December. Still, it may be premature to identify an uptrend. The trends that I see from December into 2024 are a bit steep. Steep trends are easily broken without the market changing direction. I believe the cattle market will have strength into 2024. However, I would not be surprised if the live- and feeder-cattle contract prices were soft for much of the first quarter and until the strength of the normal seasonal beef demand rally becomes more known. I anticipate uptrends forming in most, if not all contracts. Watch your charts.