With corn prices still high, Anderson says, feeder cattle aren’t likely to get back to last spring’s price highs. “They’re well below the $160 range we saw in the spring. With corn prices looking to be well-supported for most of the rest of this marketing year, I don’t think we’ll take out those highs. We could get back into the low $150s for Southern Plains feeder cattle.”

This year has been “a really tough one” to try and figure out what’s been going on with inventory levels, he says. “The big question over the next couple of months will be what’s our cow inventory going to look like?

“In 2012, we never got above year-ago slaughter levels, even in the middle of the drought. We were way below 2011 levels — which is not what we’d expect in a drought.

“But, this was the second year of drought for the cattle industry. Texas, Oklahoma and the Plains region were devastated in 2011, and a huge liquidation took place. So, when it came to projecting future inventory levels we were comparing 2012 with what was already an abnormal situation.

“We went from well below the three-year average to right in line with the average, even with a smaller cow herd. There was a quick purge, with average or above slaughter levels, and everyone then tried to hold what they had. We were consistently at or below average slaughter levels for most of the fall.

“The questions now: Is that over? Are cow numbers down as low as they’re going to go? Or do we have another little bit of purge coming in the cow inventory? I don’t think we’re through yet; I don’t think we’ve had all the liquidation we’re going to see nationally.”

It’s a bit different in the Mid-South, where producers have a lot of grass and have had an exceptionally good hay crop this year, Anderson says.

“But that’s not the case elsewhere — in the rest of the country, there’s not a lot of hay. Hay numbers are the lowest they’ve ever been; even adjusting for a smaller herd, it’s a very tight hay inventory.

“There are a lot of people around the country with just enough hay to make it until about Feb. 10. And that’s not long enough for most to make it through next spring.”

Further, Anderson says, “I think the hay inventory is pretty loose in terms of what’s being classed hay — anything that’s rolled up and got twine around it is being called hay in a year like this.”

After Jan. 1, he says, “I think there will be some pretty strong incentives to sell more cattle, and cow inventory numbers will decline from where they are now. I think inventory could drop another 1 percent to 1.5 percent, and given current numbers that’s a pretty substantial drop.”

With calf and cows on feed numbers, Anderson says, the effects of a small inventory “are really starting to take hold in placement numbers. For the last three months, placements have been well below year-ago levels, and I think that will probably continue. 

“We’re not out of cattle, but we have reached the point where the pulling-ahead effect we’ve seen in numbers has run its course. Inventory has reached the point we’re going to see substantial drops in placement numbers going forward, and in the cattle on feed inventory.

“We’ve had a couple of months where we’ve seen cattle on feed inventory drop well below year-ago levels, and I think we’ve got to expect that to continue.”

That has been somewhat offset, “to a bigger degree than I would’ve thought possible,” Anderson says, “by moving cattle up to heavier weights. It has been a real shock to me, with $7 to $8 corn, to see big year-over-year increases in slaughter weights all through the summer and fall. That’s really phenomenal.

“Part of that, I think, is the supply management strategy of the packers: ‘We’ll take them bigger, because we know we’ve got fewer of them coming.’”