September 24, 2010

US August cattle-on-feed numbers beat estimates

US cattle-on-feed in August registered an on-year jump of 3% to 10.17 million head, exceeding pre-report estimates of 1% decline on-year, the latest USDA report showed.

The increase in US cattle-on-feed numbers has been due to higher cattle placements for much of this year, while marketings during April and July declined on-year.

Also rising had been cattle placements into US feedlots during August, which were up 7% on year ago levels, to 2.27 million head. This was largely an unexpected jump in numbers, with the CME Daily Livestock Report pre-report estimates anticipating a small fall in placements.

This rise in cattle-on-feed numbers and placements has pressured the Live Cattle futures prices lower this week. The October and December contract at the beginning of this week lost 1.24US¢/lb and 1.35¢/lb respectively, on the end of last week's prices.

There should be a short term rise in fed beef supplies over coming months, as marketings in August have now increased 7% on-year, while placements remain higher. It is expected however that placements will start to drop off into the fourth quarter of 2010, with the smaller US calf crop resulting in tighter feeder cattle supplies.