March 27, 2009

US cattle on feed numbers as of March 1 decreased 5 percent on-year to 11.2 million head, according to the latest USDA Cattle on Feed report.

The fall is greater than what pre-report estimates had projected.

Cattle placements during February fell 3 percent on-year to 1.678 million head, when analysts had expected an increase of 1.3 percent. Cattle marketings also fell 5 percent to 1.682 million head.

Total cattle slaughter for February decreased 5 percent while beef production fell 3 percent, reflecting the marketing of heavier cattle due to their higher placement weight last year.

Higher placements were expected to continue during February but the tightening of feeder supply has begun. The lower placements indicate a drop in fed cattle supply in four months' time, and could act as a support mechanism for beef price increases.

However, that is dependent on beef demand, as negative sentiment continues within the industry for primal beef cut price to further weaken, especially given current Choice and Select prices are nearly similar.