September 17, 2009

Analysts had mixed opinions about the number of cattle placed into feedlots during August, but they all agreed that marketings declined last month, according to forecasts for the federal government's upcoming cattle-on-feed report.

 

USDA's monthly cattle-on-feed data will be released Friday.

 

The Dow Jones Newswires' monthly survey of market analysts' average projected number of cattle on feed as of September 1 is 98.5 percent compared with a year ago. This was derived from a 97 percent to 100.6 percent range.

 

August cattle placements were estimated from 96.6 percent to 112 percent with a 100.9 percent average. And, animals marketed last month drew a 95.3 percent average forecast based on a 93 percent-to-96.5 percent range.

 

"Cattle placed in July showed a healthy increase which may or may not have carried over into August," a brokerage firm's trader said. "That fed into the wide range of trade estimates for August placements this time around."

 

Ron Plain, a University of Missouri livestock economist, offered a 97 percent placement figure. He characterised July's placement rate as "temporary" because, he said, cattle numbers are not sufficient enough to sustain placements at that level for an extended period of time.

 

Furthermore, Plain said feeder cattle available for placement have declined this year because of a smaller calf crop. Plus, he said, cattle feeders' profits have been under stress so far this year which may have curbed placements last month.

 

"If my numbers are right, it will be the smallest placements in August since 2005," said Plain.

 

However Don Roose, an analyst with US Commodities, anticipates a 112 percent placement result due to decreased feeder input costs and lower interest rates. Also, he said, cattle that have grazed on lush pastures over the past few months were possibly driven into feedlots again in August.

 

Plain expects a 95.7 percent USDA August cattle marketing figure based on reduced cattle slaughters, fewer cattle on feed and lighter-than-expected placements this year. The number of marketing days for August 2009 were the same as in August a year ago, said Plain and others.

 

A marketing outcome on par with Plain's 95.7 percent marketing projection would make it the lightest such figure for August since before 1996 when the government began the current data series.

 

Roose, who sees August marketings at 94 percent, said feedlots were optimistic about cattle prices gaining ground. That, he said, resulted in feeders constantly trying to chase those values at the detriment, to some degree, of marketing efficiency.

 

Plain foresees a 98 percent September 1 cattle-on-feed outcome partly because of producer profitability issues. A US government on-feed outcome matching Plain's estimate would make it the lowest cattle-on-feed for September 1 number since 1999.