By Theopolis Waters
CHICAGO, April 25 (Reuters) – The number of cattle placed in U.S. feedlots last month unexpectedly fell five percent from March 2013 after several years of drought in parts of the country led to fewer animals for feedlots to draw from for fattening, a government report showed on Friday.
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 report showed March placements at 1.795 million head, down five percent from 1.884 million a year earlier. Analysts, on average, had expected a 0.8 percent increase.
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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 feedyards,” he said.
Rich Nelson, chief strategist with Allendale Inc, said fewer cattle are available now following five consecutive months of larger placements, partly fueled by record-high cattle prices.
He added that in early March, bouts of harsh wintry weather may have delayed the sale of animals at some auction barns, which might have kept numbers from going to feedlots.
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 versus modest increases in Nebraska and Colorado.
“The big placement drop in the southern Plains, in the 700 to 799 weight category, were 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 USDA’s data showed the number of cattle placed in California, Arizona and even Texas down from last year, all three states showed marked increases compared to the prior 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.
USDA put the feedlot cattle supply as of April 1 at 10.860 million head, down 1.0 percent from 10.924 million a year earlier. Analysts polled by Reuters, on average, had expected an increase of 0.2 percent.
Feedlot supplies reflect generally tight cattle numbers and fewer animals that were moved into feedyards last month, analysts said.
The government said the number of cattle sold to packers, or marketings, in March was down 4.0 percent from a year earlier, to 1.660 million head. Analysts forecasted 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.
Analysts expect Chicago Mercantile Exchange live cattle futures to open 0.200 to 0.500 cent per lb higher on Monday, based on Friday’s USDA report.
On Friday, CME live cattle for June delivery closed 0.925 cent per lb higher at 136.775 cents, and August up 0.700 cent to 135.600 cents.
Some of the report’s bullish tone had already been factored into futures’ rally prior to the data’s release, analysts said.
