The USDA recently forecast U.S. beef production to fall 5.4 percent in 2014 compared to 2013 and to be as much as 6 percent lower in the second half of the year.   

Friday’s USDA cattle report showed new placements onto feedlots in December rose 1.0 percent year-over-year, as sky-high prices for finished cattle and cheaper feed prices improved margins for feedlot operators and attracted the uptick in placements.

However, total feedlot inventories still remain historically low for this time of year. At 10.6 million head, they’re 5.4 percent below a year ago and 6.7 percent below the five-year average. Additionally, low placement numbers from May through September 2013 will lead to reduced cattle slaughter for February through April 2014.

Not surprisingly, live cattle futures continue to set record highs, hitting $143.93/cwt on Thursday, 14.4 percent higher than a year ago and 36 percent above the five-year average for this time of year.

Contact John T. Barone at jbarone@mktvsn.com.