August 30, 2010

US cattle placements down in July

After four months of higher feeder cattle placements into US feedlots, July saw placements decline 6% on-year, to 1.75 million head, according to the USDA.

While placements declined on-year, the number was still above pre-report estimates, which resulted in a relatively neutral impact upon the market.

Despite reduced cattle placements in July, US fed cattle supplies should increase slightly over coming months, with lower cattle marketings during the past four months and higher cattle on feed numbers in April, May and June.

While the increase in fed cattle supplies may put some downward pressure on cattle and beef prices in coming months, there are still several bullish factors in the market, including lower frozen beef inventory levels in US cold storage facilities, higher pork prices, rising beef export volumes and tight imported beef supplies.

US beef production during July dipped 2% below year ago levels, to 1.01 million tonnes. However, weekly figures for August are showing beef production is now currently running approximately 3% above year ago levels.

Looking ahead, while a short-term rise in fed beef supplies is expected, the recent USDA US cattle inventory report indicated a decline in the US calf crop. This will see fewer cattle placements over coming months, which in turn will lead to US fed cattle supplies tightening toward the end of the 2010 and into 2011.