Reuters — The number of cattle placed in U.S. feedlots in June fell 6 per cent from a year ago as plentiful grazing land allowed animals to be fattened outside of feedyards longer, a government report showed on Friday.
Feedyards are drawing from a shallow pool of market-ready animals after years of drought in parts of the country shrunk the herd to the lowest level in 63 years.
Most of the livestock moved into feeding pens in June will come to market beginning in November, and should keep cattle and beef prices near record highs into 2015, said analysts.
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Cattle futures on the Chicago Mercantile Exchange were stronger on Friday, hitting fresh highs to end the week.
The U.S. Department of Agriculture report showed June placements at 1.455 million head, down 6.0 per cent from 1.551 million a year earlier. Analysts, on average, had expected a 3.4 per cent decrease. It was the lowest placement result for the month of June since 1.391 million in 2009.
“There are not many cattle out there and we’ve got a lot grass, so cattlemen are hanging on to those feeder cattle and keeping them on pasture,” said University of Missouri economist Ron Plain.
John Ginzel, an analyst with Linn Group, partly attributed the lighter-than-expected placements to drought in California and the western states.
Fewer cattle are entering feedlots now in California after prolonged dryness drove up feed and hay prices, he said.
On the other hand, Friday’s USDA data suggests that some feedlots in the Plains have expanded their placements in anticipation of another bumper corn crop this fall, said Ginzel.
USDA put the feedlot cattle supply as of July 1 at 10.127 million head, down 2 per cent from 10.375 million a year earlier. Analysts polled by Reuters, on average, forecast a decline of 1.7 per cent.
The 2 per cent feedlot supply reduction reflects the report’s smaller placement figure, said analysts.
The government said the number of cattle sold to packers, or marketings, was down 2 per cent in June from a year earlier, to 1.847 million head. Analysts projected a drop of 2.0 per cent from 1.880 million last year. It was the smallest marketing figure for the month since USDA began the dataset in 1996.
Analysts expect Friday’s report to have a modestly bullish impact on Chicago Mercantile Exchange live cattle futures on Monday.
“Futures prices for slaughter cattle are already unbelievably high … there is nothing in this report that will scare bullish traders,” said Plain.
USDA also issued the twice-annual cattle report for July that was reinstated after being discontinued last year due to budget cuts.
The data showed the U.S. cattle herd as of July 1 at 97.0 per cent of 2012, or 95.0 million head, and the lowest for the month of July since the series began in 1973.
“The results are not meaningful since we don’t have year-ago numbers,” said Plain.
Theopolis Waters writes for Reuters news service in Chicago
