The number of cattle placed in U.S. feedlots in September increased 1 percent from a year earlier, a government report showed on Thursday.
Analysts attributed the rise to lower-priced corn, which reduced the cost of fattening cattle in feedlots. Also, higher prices for slaughter-ready cattle improved margins and drew more animals into feedlots.
The U.S. Department of Agriculture showed September placements at 2.025 million head, up 1 percent from 2.004 million a year earlier. Analysts, on average, expected a 1.2 percent increase.
Although up from last year, September placements were the second lowest for the month since USDA began the current data series in 1996.
USDA reported the feedlot cattle supply as of Oct. 1 at
10.144 million head, down 8 percent from a year earlier. Analysts, on average, expected a 7.3 percent drop. The supply has been declining and is now at the lowest level for the month in 15 years.
The number of cattle marketed to packers in September was up 6 percent from a year earlier at 1.695 million head. Analysts had forecast at 4.1 percent rise.
Analysts viewed Thursday’s report as neutral to mildly bullish for Chicago Mercantile Exchange live cattle futures. Electronically-traded live cattle contracts firmed slightly following the data’s release before easing later.
CME live cattle futures for December delivery settled Thursday afternoon down 0.200 cent per lb to 132.975 cents. The February contract closed up 0.025 cent at 134.250.
“There was not much difference between the estimates. It is pretty neutral for the market,” said Ron Plain, University of Missouri livestock economist.
The September marketings were encouraging, which were slightly higher than trade expectations, he said. There was one more day to market cattle last month than in September a year ago.
The government shutdown earlier this month temporarily suspended USDA livestock reports that analysts rely on to develop estimates on the monthly cattle data.
“People were putting numbers together for estimates without current USDA data. Given the shutdown we were not working with the same amount of data as usual,” Plain said regarding the marketing figure.
The increase in cash prices during the last two weeks in September and improved feedlot profitability as corn became more affordable attracted cattle into feedyards, said Allendale chief strategist Rich Nelson.
The placement data suggests the trend of low placements will continue into the first half of 2014, which should help support deferred CME live cattle futures, he said.