Thin feedlot margins drop May U.S. cattle placements

CHICAGO (Reuters) — The number of cattle placed in U.S. feedlots in May declined seven percent from a year ago as higher-priced calves caused feedyards to bring in fewer of them for fattening, a government report showed on Friday.

Improved grazing land in parts of the country allowed ranchers to grow cattle outside of feedlots longer. Cattle are hard to come by after several years of drought shriveled crops, reducing the herd to its smallest in 63 years at 87.730 million head.

May’s lower placements confirms continued tight supplies this fall and the likelihood slaughter cattle and beef prices will remain high, said University of Missouri livestock economist Ron Plain.

The U.S. Department of Agriculture report showed May placements at 1.912 million head, down seven percent from 2.055 million a year earlier. Analysts, on average, had expected a 7.6 percent decrease. It was the smallest placement figure for the month of May since 1.810 million in 2011.

Plain attributed last month’s placement slowdown in part to the lack of readily available animals and ranchers retaining heifers for breeding to rebuild the drought-depleted U.S. herd.

Rich Nelson, Allendale Inc. chief strategist, said feedlots in May did not actively market finished cattle in response to high prices for calves, or feeder cattle, at the time.

USDA put the feedlot cattle supply as of June 1 at 10.594 million head, down two percent from 10.767 million a year earlier. Analysts polled by Reuters, on average, forecast a decline of 1.6 percent.

The feedlot supply reflected less cattle being placed and the shallow pool of animals for feedlots to draw from, analysts said.

“There are not that many cattle out their, so there is no need to rush them into feedlots,” Plain said.

The U.S. government said the number of cattle sold to packers, or marketings, was down four percent in May from a year earlier, to 1.865 million head. Analysts had estimated a drop of 4.3 percent from 1.948 million last year.

May 2014 marketings tied the May 2010 outcome that was the smallest figure for the month since USDA began the dataset in 1996.

There was one less day to market cattle in May 2014 than the same month last year.

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