By Theopolis Waters
CHICAGO, March 18 (Reuters) – The number of cattle put into U.S. feedlots in February climbed 10 percent from a year earlier to their highest level for that month in eight years, according to a USDA report released Friday.
The report was called bearish for CME live cattle futures.
The placement results, which shed light on the volume of cattle that will go to market in the future and therefore cattle prices in the coming months, surpassed industry forecasts after feedyards benefited from more affordable feed.
Placements were up because calf and feed prices were down, helping to improve feedlot operating profits following 15 consecutive months of heavy financial losses. The placement number also reflected one extra day in February because of leap year.
Feedlots finally brought in cattle that had been on healthy pastures for several months.
February’s placement outcome appeared especially large in comparison with the much smaller year-earlier result which was hurt by foul weather and a sluggish cattle herd recovery from severe drought in 2012, experts said.
They said cattle that landed in feedlots in February will begin to arrive at packing plants in June, which should keep a lid on beef and slaughter cattle prices during that period.
The report showed February placements at 1.71 million head, up 10 percent from 1.551 million last year and well above analysts’ average forecast of 1.68 million.
It was the biggest number of placements for that month since 1.723 million in February 2008, according to University of Missouri economist Ron Plain.
The USDA put the feedlot cattle supply as of March 1 at 10.77 million head, up one percent from 10.688 million a year ago. Analysts, on average, had predicted a marginal increase.
The government said the number of cattle sold to packers, or marketings, rose five percent in February from a year ago, to 1.591 million head.
Analysts projected a 4.7 percent increase from 1.516 million last year.
“We’ve had low placements for seven months in a row before this. Now we have this small backlog of available calves and feeders waiting outside of feedlots that need to come back in” said Allendale Inc. chief strategist Rich Nelson.
Plain said the outlook for feedlots appeared bright given low corn prices and less significant economic losses for feedyards.
He said one extra day in February because of leap year resulted in 3.6 percent more placements for the month.
Analysts called Friday’s placement outcome bearish for Chicago Mercantile Exchange live cattle futures on Monday.
However, they added that market losses prior to the data’s release suggest some traders may have anticipated much larger placement numbers.
