U.S. cattle placements declined in April but more supplies ahead

CHICAGO (Reuters) – The number of cattle placed in U.S. feedlots for fattening dropped by about 8 percent in April from a year ago, but abundant animal supplies were available for meat packers, suggesting beef will be ample and prices potentially lower later this year.

The U.S. Department of Agriculture in a monthly report said cattle placements in April totalled 1.695 million head, or 92 percent of the same month in 2017. That was slightly above analyst estimates for 1.680 million or 90.9 percent of a year ago.

Chicago Mercantile Exchange live cattle futures turned lower after the data was released at midday, with the most-active August contract easing by 0.175 cent to 101.600 cents per pound. Total cattle on feed as of May 1 were 11.558 million, or 105 percent of last year. That was the second highest for May in the USDA data series dating back to 1996 and compares with analyst estimates for 11.535 million, or 104.9 percent of last year.

Coupled with another USDA monthly report released on Tuesday showing increased supplies in cold storage of beef, pork and poultry, the cattle data on Friday indicated that expansion of herds and flocks in recent years has boosted meat supplies for U.S. consumers.

“We have a lot of tonnage coming at us. You’ve got a lot of pork coming at us, a lot of poultry coming at us,” said U.S. Commodities analyst Don Roose, adding that the USDA also recently lifted its demand forecast for meat consumption. USDA said the number of cattle marketed, or sold to packers, in April was up 6 percent from a year ago to 1.803 million, about even with analyst estimates for 1.805 million.

The report was one of only a handful of releases scheduled to come out during trading hours. It was moved up by three hours ahead of the three-day U.S. Memorial Day holiday weekend. Since most of the data was near pre-report expectations, the reaction in futures was relatively muted.

“There’s no big surprises here,” said Allendale Inc analyst Rich Nelson. “This does certainly clarify the supply change we’ll see in the next few months. The front-end supply is there and there will be a sharp transition to a much larger supply.”

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