April 27, 2007

US cattle on feed posts lower numbers

The number of cattle in US feedlots as of April 1 this year registered a 1.4 percent decrease from a year ago, totalling 11.64 million head. The only states that recorded higher year-on-year feedlot inventories were Washington, Iowa, Nebraska and South Dakota.

With a number of ethanol plants mushrooming in their areas, Iowa, Nebraska and South Dakota are expected to gain from vast quantities of relatively inexpensive wet distillers' grain. These developments may indicate in feeding pattern in these cornbelt regions due to ethanol boom and higher corn prices.

Feeder cattle placements in March were 6.9 percent higher than a year ago, reaching 1.96 million head. The higher placements were in response to feedlot operators recognising the potential shortage of cattle marketings in mid-summer.

Fewer fed cattle were marketed during March than expected as marketings totalled 1.84 million head, 5.6 lower than a year ago. Analyst pre-report estimates had anticipated marketings will drop by 3.9 percent on March 2006 levels. According to the CME Daily Livestock Report, the slow marketing pace could be bearish for nearby fed cattle futures contracts. All other aspects of the report are expected to generate a neutral response in cattle futures markets.