June 29, 2009

US cattle on feed as of June 1 fell four percent on-year to 10.407 million head, the 14th straight month to record a year-on-year decline, according to the latest USDA Cattle on Feed report.

Cattle placements during May fell 14 percent to 1.638 million head, worse than analysts' forecast of a 12-percent drop.

The decline was in line with earlier USDA projections that feeder cattle placements would tighten in the second half of this year, due to a smaller US calf crop and retention of heifers for herd rebuilding.

The sharp drop in cattle placements also reflected the continuation of negative profit margins in the fed cattle market, as beef demand wanes and higher feed costs persist.

The lower placement numbers also indicate a tightening of fed cattle supply around this time, a factor supportive of an upward price movement of fed beef.