USDA’s January cattle on feed report was a bit bullish. It said fewer cattle were placed on feed during December and more were marketed than predicted by the pre-release trade estimates. The total number of cattle on feed at the start of January (11.009 million head) was down 2.0% compared to January 2009. The pre-release survey expected it to be down 1.5%. The January inventory is the lowest on-feed number for any January since 2003. The number of cattle on feed has been below the year-ago level for 19 of the last 21 months.

USDA said marketings of fed cattle from large feed yards during December totaled 1.742 million head, up 3.5% compared to December 2008. The trade forecast December marketings to be up 2.3%. Steer and heifer slaughter in December was up 2.4% from a year earlier. There were the same number of slaughter days, so marketings are outpacing placements.

USDA said December placements of cattle into large feed yards (over 1,000 head capacity) were 6.1% below December 2008. The average of pre-release trade forecasts was for December placements to be down 4.3%. Through all of 2009, placements were down 0.4% compared to 2008. December placements were the lowest for any December since 1998.

The number of cattle placed on feed weighting less than 600 pounds was 1.8% higher than last year. Placements of feeders weighing 600 pounds and heavier were down 8.7% compared to a year-ago. The calculated average weight of cattle placed on feed during December was 0.3% lower than in December 2008.

Cattle feeding returns have been negative for each of the last 31 months. From June 2007 through December 2009, calculated losses for feeding cattle in the southern plains have averaged $97 per head according to the Livestock Marketing Information Center.

The average retail price for choice beef during December was $4.285 per pound. That was down 0.7 cents from November and down 9 cents from December 2008. For all of 2009, choice beef at retail averaged $4.26/pound, 6.5 cents lower than in 2008. Despite costing less, U.S. per capita beef consumption last year was down 1.3 pounds compared to 2008. When both price and consumption are down, you know demand is dropping. What is needed is a stronger economy and lower unemployment.

Cattle on Feed, 1000+ Capacity Feedlots, U.S.

                            2008      2009      2010   Percent of
                           ------- 1,000 head -------   Year Ago
On Feed December 1        11,346    11,277               99.4%
Placed during November     1,647     1,546               93.9%
Marketed during November   1,683     1,742              103.5%
Other Disappearance           76        72               94.7%
On Feed January 1         12,092    11,234    11,009     98.0%