U. S. Feeding More Cattle, But Herd Shrinks – for Jul. 29, 2010

Government cattle reports July 23 showing a larger U. S. feedlot cattle supply but a smaller U. S. cattle herd drew mild reactions from analysts, who said the numbers should have little impact on cattle prices, which this year have been the highest since 2008.

One U. S. Agriculture Department report showed the number of feedlot cattle, which are fattened for slaughter, up 3.3 per cent as of July 1 versus a year ago. Analysts, on average, expected a 3.4 per cent increase and said profitable cattle prices this year encouraged producers to fill empty pens.

In addition, they said lush pastures in the central and southern Plains had ranchers grazing more cattle this spring and many of those young cattle were moved to feedlots in June.

USDA said 10.07 million cattle were in feedlots as of July 1. It also said placements of young cattle were 1.628 million head, up 17 per cent, and sales of mature cattle at 1.997 million, up 0.4 per cent.

USDA released its mid-year cattle inventory report July 23, which includes beef and dairy cattle, bulls, cows, and calves. As expected it showed the smallest July 1 cattle herd on record at 100.8 million head, which was down 1.2 per cent from a year ago. USDA records go back to 1973.

High feed prices in recent years and losses on cattle sales had producers reducing herds, analysts said.

While the smaller supply should not affect next week’s market prices, some analysts said higher cattle prices are likely in the future.

“When you look at these inventory numbers they are bullish for long term,” said Jim Clarkson, analyst with Chicago-based A&A Trading.

One increase in numbers was in the dairy sector, where heifers destined for dairy herds were up nearly three per cent from a year ago.

“The dairy guys just can’t help but want to expand. They’re up 2.5 per cent despite the fact they are losing money,” said Ron Plain, a University of Missouri agricultural economist.

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