Cattle prices, which seem to be stuck on a merry-go-round for months, could be inching closer to an upside move.

It all depends on processing capacity and demand as USDA pegged the inventory of cattle and calves on feed for the slaughter market at 11.55 million head as of Oct. 1.

While down 1% from the same time last year, it marks the second-highest Oct. 1 inventory since the statistical series began in 1996.

“The problem with the cattle market has been we have such a great supply in the feed yards of market-ready cattle,” Toni Dunker, market analyst with Advance Trading in Quincy, told FarmWeek.

“We’re not getting them moved through the supply chain quick enough. That’s what’s kept nearby cattle lower,” she noted. “But, when you look further out, we have much better numbers into next year.”

Live cattle prices for October hovered in the $123-$124 per hundredweight range as of Friday. But April futures were at $136.55 on the same day.

“Hopefully we’ll see better prices down the road for cattle feeders. It feels like they’re the last ones to see a move up,” Dunker said. “With higher input costs, they’re going to need better prices.”

Placements in feedlots during September totaled 2.16 head while USDA pegged marketings of fed cattle at 1.79 million head for the month, both down 3% from a year ago.

“The first glance of these numbers is supportive because of the placement number,” the analyst said. “It’s down outside of the expected range.”

With a wide spread between recent live cattle and futures prices, Dunker recommends farmers take marketing steps to lock in a price floor while still maintaining flexibility to the upside.

“Hopefully, we’ll see packers get things more current,” Dunker said. “We saw 120,000 head go through (Thursday). Hopefully, we can maintain or increase that.”

September cow slaughter totaled 551,300 head, up 6.8% compared to a year ago. Authors of the CME Group’s Daily Livestock Report provided their assessment of the market.

“It is a truly unprecedented situation where wholesale beef prices hit near record levels in August, and yet cow-calf operators were forced to sell off their cows.

“Normally high beef prices are a signal to producers to hold on to their production base because the market is looking for more product. But that price signaling system has been disrupted for the moment by limited labor availability. The result will be higher beef prices for consumers in the coming years as beef supplies are likely to continue to decline,” according to the Daily Livestock Report.