U.S. September cattle placements reach record low

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Published: October 27, 2016

cattle futures

CHICAGO, Ill. (Reuters) — Chicago cattle futures jumped higher Oct. 21, supported by a smaller than expected number of cattle entering U.S. feedlots in September.

September placements were 1.905 million head, down two percent from 1.941 million last year, according to the U.S. Department of Agriculture’s cattle on feed report.

That was well below analysts’ average forecast of 2.011 million and the smallest for that month since the USDA began tabulating the data in 1996.

Depressed profits discouraged ranchers from pulling their animals off healthy grazing pastures and deterred feedlots from buying young calves for fattening, analysts said.

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The placement shortfall does not alter the overall outlook for low beef prices next year when those animals begin arriving at packing plants in early 2017, said analysts.

The USDA put the feedlot cattle supply as of Oct. 1 at 10.266 million head, nearly in line with 10.228 million a year ago.

Analysts had forecast an average increase of 1.3 percent.

The number of cattle sold to packers, or marketings, grew five percent in September from a year ago, to 1.732 million head.

Analysts projected a 6.2 percent increase from 1.642 million last year.

Rich Nelson, chief strategist with Allendale Inc. in Chicago, said low prices this fall influenced the numbers.

“We had the cattle in the tank in terms of pricing. That discouraged a lot of these guys,” said Nelson, referring to sellers.

He cautioned that large numbers of heifers prepared to enter feedlots could increase placements in future reports.

The smaller-than-expected placement number might be partly due to the heavier weight category, which dropped for the first time since July 2014, according to University of Missouri economist Ron Plain.

He said the decline in those heavier cattle suggests the industry may have caught up with the supply of livestock available to go on feed.

The Oct. 21 data showed that heifers in feedlots were up four percent year over year, which Plain said implies a slowdown in herd expansion because of low cattle prices.

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