As expected, feedyard inventories remain below those of a year ago, as they have for the past year. Placements did pick up during December relative to a year ago, and likely continued to gain steam during January as fed-cattle and beef prices increased dramatically.

Feedlot inventories remain low, heifer placements lag According to the January Cattle on Feed report from USDA, U.S. inventories in feedlots with 1.000 head or more capacity on January 1 stood at 10.6 million head, which is 5 percent below the total from a year ago. The January 1 figure also is down from 10.7 million head a month earlier on December 1.

During December, feedlots placed 1.68 million head, up 1 percent from the same month in 2012. Feedlots marketed more cattle than they placed, with a total of 1.74 million marketed cattle falling 1 percent short of the total during December 2012. The next report in February likely will show aggressive marketings during January, with managers pulling cattle forward to capitalize on record-high prices in the range of $140 per hundredweight.

Among the cattle on feed on January 1, steers accounted for 65 percent and heifers 35 percent. Steer numbers were down 4 percent from a year ago while heifer numbers were down 8 percent, suggesting ranchers have begun retaining more heifers for breeding.

Of the cattle placed during December, 54 percent arrived weighing less than 700 pounds, while 46 percent weighed 700 pounds or more.

On January 31, USDA will release its January Cattle inventory report, which will be of great interest to the market. The usual mid-year inventory report was cancelled in 2013 due to government cutbacks, so the January report will be the first look at total cattle numbers since a year ago. Analysts expect the report to show another year-to-year decline in total cattle and beef-cow numbers, and the report also will provide some indication of the numbers of heifers ranchers intend to retain for breeding, as economic signals suggest a likely move toward herd expansion this year.

View the full Cattle on Feed report from USDA.