As of December 1, the number of cattle in U.S. feedyards with capacity of 1,000 head or more stood at 10.9 million head, which was up 1 percent from the total one year earlier, according to the USDA’s December Cattle on Feed report. That increase follows a fractional year-over-year increase on November 1 , which was the first month since August 2012 in which inventories did not decline compared with a year earlier.

Placements into feedyards during November, at 1.79 million, were down 4 percent from those during November 2013. That number also was down from placements during October, which totaled 2.36 million, down 1 percent from October 2013.

Feedyards placed significantly more cattle than they marketed during November, helping explain the higher December 1 inventory. The total for November marketings, at 1.48 million head, was down 11 percent from a year ago and the lowest for November since the series of reports began in 1996. October marketings from feedyards, at 1.69 million head, were 8 percent below those of October 2013. Those consecutive declines in the number of cattle shipped to packers probably reflects a shortage of market-ready cattle and a trend toward keeping cattle on feed longer to market at heavier weights.

Placement weights were somewhat skewed toward lighter cattle, with 55 percent of November placements entering feedyards weighing less than 700 pounds.

Weekly beef-cattle slaughter numbers have been running about 8 percent below those of a year ago, with beef production down about 5 percent. Slaughter weights have run nearly 30 pounds heavier than a year ago, and dressed weights about 20 pounds heavier, which has helped compensate for the smaller slaughter numbers.  

USDA’s 5 Area Weekly Accumulated Weighted Average Cattle Price for Friday, December 19 was $157.51 per hundredweight for steers and $156.96 for heifers, down significantly from a month earlier, when steers averaged $169 per hundredweight  and heifers averaged $168.

After months of exceptional profits, feedlot margins fell to negative $32.76 per head for the week ending December 13, according to our Sterling Profit Tracker. Fed steers averaged $161 per hundredweight that week. While that is $30 higher than a year earlier, the price was down $5 per hundredweight from the previous week. That drop in prices, coupled with high breakevens on finished cattle, has pushed margins into the red.

The Choice beef cutout value finished the week at $238.57 per hundredweight with Select averaging $229.88

View the full Cattle on Feed report from USDA.