Tight U.S. cattle supply trims feedlot placements

March placements down five percent | The USDA reported almost one percent fewer cattle compared to April 2013

CHICAGO, Ill. (Reuters) — The number of cattle placed in U.S. feedlots last month unexpectedly fell five percent from March 2013, reflecting a small herd and potentially the start of herd rebuilding.


Most analysts had anticipated a modest bump in March cattle placements compared with a year ago, driven by record-high prices for market-ready cattle last month.


The U.S. Department of Agriculture’s cattle-on-feed report issued April 25 showed March placements at 1.795 million head, down five percent from 1.884 million a year earlier. Analysts, on average, had expected a .8 percent increase.


The USDA report’s quarterly steers and heifers on-feed data showed steers as of April 1 rose 2.2 percent from a year ago, but heifers dropped 5.9 percent, said University of Missouri livestock economist Ron Plain.


“This suggests we’re keeping a lot of heifers back on farms for breeding, which helps pull down the placement number and tightens up supplies in feed yards,” he said.


Rich Nelson, chief strategist with Allendale Inc., said fewer cattle are available now following five consecutive months of larger placements, which was partly fueled by record-high cattle prices.


Bouts of harsh wintry weather in early March may have delayed the sale of animals at some auction barns, which might have kept numbers from going to feedlots, he added.


Don Roose, an analyst with U.S. Commodities, called the March placement number “a bit of a surprise.” He pointed to sizable year-over-year placement shortfalls in Texas and Kansas compared to modest increases in Nebraska and Colorado.


“The big placement drop in the southern Plains, in the 700 to 799 weight category, was possibly due to expensive feeder cattle overall and higher feed values in the south compared to the north,” said Roose.


Analysts had been keeping a close eye on cattle placements in California, where severe drought forced ranchers to downsize their herds or send them to other states to be fattened.


Although the USDA’s data showed that the number of cattle placed in California, Arizona and Texas was down from last year, all three states showed marked increases compared to the previous month.


“In California and Arizona, this is the time of year where they often get increases in placements,” said Livestock Marketing Information Center director Jim Robb.


Analysts said high prices for steers pulled more cattle into Texas feedlots from Mexico.


The USDA put the feedlot cattle supply as of April 1 at 10.860 million head, down one percent from 10.924 million a year earlier. Analysts polled by Reuters had expected an average increase of .2 percent.


Feedlot supplies reflect generally tight cattle numbers and the fact that fewer animals were moved into feed yards last month, analysts said.


The government said the number of cattle sold to packers, called marketings, in March was down four percent from a year earlier to 1.660 million head. Analysts predicted of a drop of 3.6 percent from 1.724 million last year.


March marketings were the smallest since the government began the data series in 1996.