Feedlot supply down six percent | Cattle placements still small by historical standard
CHICAGO, Ill. (Reuters) — The number of cattle placed in U.S. feedlots in October increased 10 percent from a year earlier, the U.S. Department of Agriculture said Nov. 22.
The increase was due to less-costly corn that improved feedlot profits and allowed feedlots to buy young, or feeder cattle, to fatten for slaughter, analysts said.
Feeder cattle are scarce as years of drought hurt U.S. crops and pastures, causing ranchers to shrink the herd to its smallest in more than 60 years.
While the USDA reported October placements at 2.394 million head, up 10 percent from 2.180 million a year earlier, the 2012 placements were the smallest for that month since 1996. As a result, this year’s placements are still historically small. Analysts, on average, expected a 8.7 percent increase.
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Record-high slaughter cattle prices last month also attracted more light-weight animals to feeding pens, said Livestock Marketing Information Center director Jim Robb.
“Feedlots being profitable last month didn’t hurt,” he said.
The increase in October placements suggests that the industry has returned to a more normal pattern, said Robb.
More cattle tend to enter feedlots this time of year as pastures deteriorate and before winter weather sets in, he said.
“Last year’s placements were drought influenced and the light-weight animals came well before October. This is one of the first months where demand from feedlots are pulling animals into feedyards,” Robb said.
Rich Nelson, Allendale Inc. chief strategist, keyed in on the weight category that showed cattle more than 800 pounds were up four percent year-over-year.
Since those cattle will not be market-ready until February or March, it suggests there may be extremely tight cattle numbers early in the first quarter of 2014.
As a result, cattle and beef prices may remain at or near record highs, he said.
