The trade estimate of cattle on feed February 1 is for a decline of 2.1% from 12 months earlier. If this occurs, as seems highly likely, it will be the first month to be below a year earlier since October of 2005, and only the fourth month for cattle on feed to be less than 12 months earlier since October of 2003.

The trade expectations are for a big decline in placements during January --- down nearly 16% from 2006. Fed marketings during January are believed to be up over 4% from a year earlier.

The inventory of cattle and calves in the United States and Canada on January 1 was estimated at 111.3 million head, down 0.2% from 12 months earlier. The number of cows and heifers in the U.S. and Canada that had calved was estimated at 48.1 million head, down 0.6% from the same date in 2006. The combined countries' 2006 calf crop estimated at 43.1 million head is down 0.3% from 2005.

The Canadian cattle herd on January 1 was estimated to be down 3.5% and the inventory of cows and heifers that had calved was estimated to be down 4.3% from 2006.

This smaller cow herd points to a smaller calf crop again in 2007 from 2006 for the U.S. and Canada.

Choice retail beef prices in January at $3.981 per pound were up 1.5% from December 2006, but down 2.2% from January 2006.

Live fed cattle prices in January were pushed lower due to lower retail prices and wider marketing margins. The January live cattle prices were 7.7% below January 2006 but up 1.2% from December of 2006.

Feeder steers and heifers at Oklahoma City this week were steady to $2 per cwt higher than last week. Steer and heifer calves were $2-4 per cwt higher than 7 days earlier at Oklahoma City.

The range in prices by weight groups for medium and large frame number 1 steers at Oklahoma City this week were: 400-500 pounds $123-134.50 per cwt, 500-600 pounds $113.25-132 per cwt, 600-700 pound yearlings $102.50-115.50 per cwt, 700-800 pounds $95.50-106 per cwt and 800-1,000 pounds $90-98 per cwt.

If the supply of fed cattle in coming months is as tight as indicated by the estimates of cattle on feed and demand holds, live fed cattle prices are likely to be in the $90's for some time.

Wholesale Choice beef this Friday morning at $149.42 per cwt was down $5.30 per cwt from a week earlier. Select beef was down $3.62 per cwt at $143.55 per cwt.

Cattle slaughter this week under Federal Inspection was estimated at 630 thousand head, up 9.2% from a year earlier.

Fed cattle weighted average price for the 5-market area through Thursday at $89.85 per cwt was down $1.30 per cwt from 7 days earlier. The weighted average carcass price for the 5-market area was down $1.30 per cwt at $145.20 per cwt compared to a week earlier.

The February 1 Cattle on Feed report came in a little more bullish than the trade estimates. The number on feed February 1 was down 3.2%, placements during January were down 23.1% and fed marketings were up 1.7% from 2006.

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