June 21, 2007

 

USDA cattle feedlot numbers seen steady in June

 

 

The number of cattle munching high-test feed in US feedlots at the beginning of June was about the same as a year ago, if market analysts are correct in their pre-release estimates.

 

The monthly US Department of Agriculture cattle-on-feed report is scheduled for release Friday at 3 pm EDT (1900 GMT).

 

The Dow Jones Newswires' monthly survey of market analysts projected a slight increase of 0.1 percent in the total number of cattle on feed as of June 1 compared with a year ago. Still, it would be the first time since January of 2007 that cattle on feed are estimated to be above prior year levels, according to Andrew Gottschalk and Bob Wilson of HedgersEdge.com.

 

That number was based on average estimates of a 10.3 percent increase in placements and a 1.9 percent decline in the number of cattle marketed when compared with the year-ago data.

 

Placements this year were up from a year ago because of unusually light placements in May a year ago, said Ron Plain, agricultural economist at the University of Missouri. Last year's May placements were the lowest since May of 1997, he said.

 

Even though the estimated number of cattle placed into feedlots in May was up sharply from a year ago, in terms of raw numbers, it still is low by historical standards, said Don Roose, market analyst at US Commodities. Grass conditions may be very poor in the US South-east this year, but in the heaviest cattle states, pastures this year are much better after years of drought.

 

Rich Nelson, market analyst at Allendale Inc, credited the increased interest in placing cattle into feedyards during May to lower prices for corn at that time. The July corn futures contract at the Chicago Board of Trade dipped in May to a low of USUS$3.54 a bushel on May 10.

 

Marketings during May were expected to be down overall from a year ago, but traders tended to think of this piece of data as about steady with a year ago.

 

Dan Vaught, market analyst at AG Edwards & Sons, said in an e-mailed report of his estimates that there were few shifts in circumstances from last year to this year, so there was no reason to expect much divergence in marketings.

 

The report also could show that the number of cattle on feed for 120 days or longer finally dropped below a year ago, although it still could be historically large, said Bob Price, owner/analyst at North America Risk Management Services Inc. He expected this category of cattle in the report to continue declining in coming months.