Chicago | Reuters –– Cattle movement into U.S. feedlots in November fell 11 per cent from a year ago to their lowest level since the government began compiling the data in 1996, a U.S. Department of Agriculture report showed on Friday.
Analysts attributed last month’s much smaller-than-expected placements to deteriorating margins that prompted feedyards to delay buying younger calves for fattening.
Available grazing pastures in parts of the U.S. Plains allowed ranchers and feedlots to feed cattle longer outside of commercial feeding pens.
USDA’s data showed the number of cattle placed in November weighing over 800 lbs. declined from the year-ago month, their first annual decrease so far in 2015 — another bullish market indicator, said analysts.
Cattle that entered feedlots in November will be ready for slaughter beginning around April 2016, which could help ease pressure on prices for slaughter-ready cattle at that time, the analysts said.
Friday’s USDA report showed November placements at 1.601 million head, down 11 per cent from 1.794 million last year, and well shy of analysts’ average forecast of 1.719 million.
USDA put the feedlot cattle supply as of Dec. 1 at 10.794 million head, almost in line with 10.816 million a year ago. Analysts, on average, had forecast an increase of one per cent.
The government said the number of cattle sold to packers, or marketings, rose four per cent in November from a year ago, to 1.532 million head.
Analysts projected a 2.7 per cent increase from 1.475 million last year.
“It’s a pretty big deal, record-low placements for November,” said Allendale Inc. chief strategist Rich Nelson.
The data illustrates severe financial hardship suffered by feedlots and suggests tighter cattle supplies this spring into summer, he added.
Feedyards last month, on average, lost US$490 per head of cattle sold to meat companies, their 12th straight month of losses, as calculated by the Colorado-based Livestock Marketing Information Center.
LMIC economist Jessica Sampson was encouraged by last month’s slippage in placement of heavier cattle, which she attributed to a possible cleanup by feedlots of some of the bigger yearlings.
She said that those who owned the cattle — stockers or cow-calf operators — have either enough feed or ample pasture to hold them through the winter.
Analysts viewed USDA data as bullish for Chicago Mercantile Exchange live cattle futures on Monday.
— Theopolis Waters reports on livestock markets for Reuters from Chicago. Additional reporting for Reuters by Michael Hirtzer in Chicago.