Low cattle placements buoy cattle futures early this week
U.S. live cattle futures closed higher on Monday following Friday’s U.S. Department of Agriculture’s (USDA) cattle-on-feed report that showed cattle placed in feedlots in September at a 16-year low, analysts and traders said.
Feeder cattle futures were lower on waning demand for young cattle due to the lack of profit in the feeding business and on firmer Chicago Board of Trade corn prices.
Traders said the worst drought in more than 50 years in the United States over the summer and the resulting high corn prices were affecting the cattle-feeding industry.
Friday’s government report showed cattle placed on feed, at just over 2.0 million, were below expectations and the smallest for the month of September since the USDA began keeping track of the data in 1996.
“The back months found support from the placements number while gains were capped in the front months by the disappointing marketings,” said Dennis Smith, a broker for Archer Financial.
Also, “cattle are still going to market at record heavy weights,” Smith said.
The average weight of cattle slaughtered last week was estimated by USDA at 1,320 lbs., compared with 1,316 the prior week, and 1,293 a year earlier.