May 21, 2013

 

 

With rising cattle slaughters driven by declining feed costs, the number of cattle placed in US feedlots was up 15% during April 2013, from a year earlier.

 

The USDA reported April placements at 1.750 million head, or up 15% from 1.521 million in April 2012. Analysts, on average, estimated a 13.1% increase.

 

"The price for corn was much lower in April than in March so it made it more attractive to place cattle," said University of Missouri's livestock economist, Ron Plain.

 

Chicago Board of Trade corn futures last month averaged US$6.70-3/8 per bushel, down from US$7.14-3/4 in March. In August 2012, corn set a record high of US$8.43-3/4.

 

In addition, improved weather last month allowed ranchers to move cattle into feedlots, analysts said. Also, April 2013 placement compare with much smaller placement in April 2012, they said.

 

Livestock Marketing Information Centre's director, Jim Robb, attributed some of the increase in April placements to last year's drought, which tightened hay stocks and forced more cattle into feeding pens.

 

"Still, overall cattle numbers will remain tight which does not change the outlook for higher beef prices ahead," said US Commodities analyst, Don Roose.

 

Separate USDA data showed the average US retail beef price in April was US$5.26 per pound, down from the March all-time high of US$5.30 per pound but up from US$4.99 a year earlier.

 

USDA put the feedlot cattle supply as of May 1 at 10.735 million head, or 97% of a year earlier. Analysts, on average, expected 96.1%. It was the smallest supply for that date since 10.428 million in 2010.

 

The number of cattle sold to beef packers, or marketing, in April was up 2% from a year earlier at 1.855 million head versus the forecast for a 2.8% increase. That was the biggest April marketing figure since 1.857 million in 2010. The increase was due in part to one more weekday to slaughter cattle this year than in April 2012. Also, fewer cattle were available than a year earlier, analysts said.

 

Analysts said that while the placements were negative, the recent pullback in Chicago Mercantile Exchange (CME) cattle futures prior to the data's release may have factored in the report's bearish implications.

 

"I think cattle futures are way too low. I don't see any reason for them to be as low as they are and I don't think this (report) will push them any lower on Monday (May 13)," said Plain.