May 28, 2009

The number of cattle on feed in US feedlots continues to fall, with a three percent on-year decline posted as of May 1, 2009, according to the latest USDA data.

Cattle on feed reached 10.822 million head as of May 1, 2009, as feedlots struggle to move cattle into a market that is experiencing slow demand. April also saw marketings drop seven percent on-year to 1.871 million head.

US beef demand is struggling, mainly at the foodservice level, with beef production in the first four months of 2009 down five percent on-year, while wholesale boxed beef cutout averaged a 3.5-percent drop.

On the contrary, retail beef prices have increased as grocery demand hold steadier than foodservice demand amid the uncertain economic conditions.

While the market braces for a six-percent increase in the number of cattle placed on feed, cattle placements rose only four percent to 1.6 million head.

Cattle placements over the past two months are higher than year-ago volumes, as lower feed costs and feeder cattle prices have lured feedlots to increase numbers on feed compared to a year ago.

Feed prices have recently moved higher and a small calf crop is expected in 2010 which could see a continued drop in fed cattle supplies.