Cold snap slows US cattle placements

The worst combination of cold and windy weather as well as weak supplies of calves have slowed the placement of cattle into US feedlots to its lowest since 1998.

Analysts believe that the USDA data on Friday (Jan 22) will show a 5% slide, year-on-year, in cattle placed last month, although one broker, Frontier Risk Management, has forecast that the drop could be as much as 16.1%.

"Reasons for this trend are higher costs to fatten cattle and lower supplies of calves and the cold winter," analysts at Commerzbank said, also noting the impact of these expectations on Chicago prices.

The analysts said that prices for live cattle increased by 11% to US$87 per 100 pounds within a month, adding that the price for feeder cattle advanced by 8% to US$98 per 100 pounds.

The decline in placings comes at the start of a year in which US beef exports are expected to rise by almost 10% from 2009's 1.86 billion pounds, supported by global economic growth and a weaker dollar, the USDA said in a report on Wednesday.

Besides causing logistical problems for getting animals into feedlots, cool weather can deter operators from taking up livestock due to the difficulties it causes for husbandry and potentially profitability.

According to the USDA report, cattle marketed from feedlots in March, having gone through the coldest part of the winter, consume the greatest amount of feed per pound of gain and gain the least weight per day.

The report also stated that the combination of cold, wet, and windy conditions, as was recently the case on the Plains, is the worst combination for feedlot performance, resulting in high costs and reduced feed conversion.