CHICAGO, Ill. (Reuters) — The number of cattle placed in U.S. feedlots in June fell six percent from a year ago as plentiful grazing land allowed animals to be fattened longer outside of feedlots.
A U.S. Department of Agriculture report released July 25 was expected to support live cattle futures on the Chicago Mercantile Exchange.
At the market’s open July 28, August rose to fresh record high of 160.25 cents per pound.
It drifted lower but closed at 159.425, a new record settlement, driven by record high cash cattle and beef prices.
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Feedlots are drawing from a shallow pool of market-ready animals after years of drought in parts of the country shrunk the herd to the lowest level in 63 years.
Most of the livestock that moved into feeding pens in June will come to market beginning in November, and should keep cattle and beef prices near record highs into next year, said analysts.
The USDA report showed June placements at 1.455 million head, down six percent from 1.551 million a year earlier. Analysts, on average, had expected a 3.4 percent decrease. It was the lowest placement result for the month of June since 1.391 million in 2009.
“There are not many cattle out there and we’ve got a lot of grass, so cattlemen are hanging onto those feeder cattle and keeping them on pasture,” said University of Missouri economist Ron Plain.
John Ginzel, an analyst with Linn Group, partly attributed the lighter-than-expected placements to drought in California and the western states. Fewer cattle are entering feedlots now in California after prolonged dryness drove up feed and hay prices, he said.
On the other hand, the USDA data released July 25 suggests that some feedlots in the Plains have expanded their placements in anticipation of another bumper corn crop this fall, said Ginzel.
The USDA put the feedlot cattle supply as of July 1 at 10.127 million head, down two percent from 10.375 million a year earlier. Analysts polled by Reuters forecast an average decline of 1.7 percent.
The two percent feedlot supply reduction reflects the report’s smaller placement figure, said analysts.
The government said the number of cattle sold to packers was down two percent in June from a year earlier to 1.847 million head.
Analysts projected a drop of two percent from 1.88 million last year. It was the smallest marketing figure for the month since USDA began the data set in 1996.
The department also issued the twice-annual cattle report for July, which was reinstated after being discontinued last year because of budget cuts.
The data showed the U.S. cattle herd as of July 1 at 97 percent of 2012, or 95 million head, and the lowest for July since the series began in 1973.
“The results are not meaningful since we don’t have year ago numbers,” said Plain.
