USDA's monthly Cattle On Feed report, released last Friday, contained no surprises, says CME's Daily Livestock Report. October placements of 2.491 million head marked the third month in a row that 2011 numbers have virtually matched those of 2010, but this is the first month since June that placements have been close to "normal" as measured by the 2005-2009 average, CME says. Meanwhile, July, August and September placements exceeded the five-year average by 21.5%, 6.7% and 5.8%, respectively.

Winter wheat conditions in the Southern Plains are mixed but likely supported some movement of cattle out of yards in October. Oklahoma and Kansas are relatively good in terms of both emergence and condition, but only 56% of Texas wheat has emerged and 44% of Texas wheat acres are rated poor or very poor.

"Other disappearance" from feedyards (i.e., not marketings) in October numbered 93,000 head, 50% more than last year. That marks the highest monthly figure since May 2010 and the highest figure for October since 2003.

Placement weights were back to "normal" for the second month in a row after spending the first eight months of 2011 below the average of the past five years. The October average of 684.4 lbs. compares to 712.7 lbs. in September (a very normal decline) and 691.5 in October 2010. Regarding placements, 32% of October placements weighed under 600 lbs., a relatively high figure compared to 29%, 25% and 29%, respectively, the past three years.

Total cattle on feed continues to move back toward year-ago levels. The Nov. 1, year-on-year increase of 3.7% is the smallest such figure for this year. Only one month in 2011 (June) had placements significantly lower than last year but we expect placements to now be consistently lower than year-ago levels for the foreseeable future, narrowing the gap in feedlot inventory numbers.

This year's drought-driven beef cow liquidation will negatively impact cattle supplies for the 18-24 months after that. Cattle and beef supplies are going to get very tight.