Record high feeder cattle prices leave no doubt that U.S. feeder cattle supplies are extremely tight. On Jan. 1, estimated feeder supplies were down 2.7 percent over the previous year amid indications of heifer retention.

We are approaching mid-year with feeder cattle prices at historic levels and showing little sign of slowing down. The question of what to expect in the second half of the year is on many minds. So far, 2014 has been in sharp contrast to the first half of 2013.

After the wild January ride, cattle and beef markets are settling into somewhat more stable and realistic levels moving forward. A barrage of winter storms has affected consumption and distribution of beef as well as feedlot production. For the year to date, beef production is down 8.6 percent with cattle slaughter down 9 percent. 

As expected, the annual cattle inventory report confirmed that the U.S. cattle herd continued to liquidate in 2013. The inventory of all cattle and calves was 87.7 million head, down 1.8 percent from one year ago and the smallest total U.S. cattle herd since 1951.  

The Choice boxed beef cutout reached $231.71/cwt. on Jan. 17. That was up 15.5 percent since Jan. 2. Select boxed beef, which had never been higher than $200/cwt. prior to Jan. 6, was at $229.32/cwt. on Jan. 17.

Cattle markets are heading into the final holiday period of 2013 at record or near-record price levels across the board. Cattle slaughter and beef production are falling as the market transitions into a much tighter supply situation in 2014. Cattle and beef prices are expected to push to even higher record levels in 2014.

Cattle and beef markets have strengthened in October despite the uncertainty of the past couple of weeks. Feeder and fed cattle prices, along with boxed beef, have all advanced compared to pre-shutdown reports with fed cattle showing the strongest relative increase. By the end of this week many of the data holes may be filled in with a clearer picture of slaughter, carcass weights and beef production.

The lack of federal government data collection has already impacted livestock markets. The impacts will grow exponentially if the situation persists for many more days. The most significant initial impacts are on business arrangements that base beef and cattle transactions on USDA price reports. 

The September USDA Cattle on Feed report shows a Sep. 1 feedlot inventory at 9.88 million head, down 7 percent from last year and the smallest September feedlot inventory since 2003.  

The status of cattle inventories in the U.S. is unknown at this time. The USDA’s National Agricultural Statistics Service cancelled the mid-year report, so there are no official July 1 survey-based estimates of cattle inventories by class, 2013 calf crop or total cattle on feed available.