November 8, 2010

US October cattle-on-feed numbers jump 3%

The number of cattle on feed in the US during October rose 3% year-on-year, to 10.8 million head, according to the latest monthly results released by the USDA.

Cattle-on-feed have now risen for the past five consecutive months, after numbers fell to their lowest level in over five years in August 2009.

Although the increased numbers on feed would ordinarily indicate lower prices for fed cattle and beef, the futures markets largely moved in the other direction, outweighed by the current low US dollar and positive outlook for agricultural commodity prices, according to analysts.

US lot feeders have grappled with very low profitability in recent years, with corn becoming increasingly expensive, largely due to the influence of the ethanol industry. Feeder cattle have also been generally dearer, with the declining US herd (now at its lowest level in several decades) forcing lot feeders to bid aggressively for reduced numbers of cattle.

The market outlook is unlikely to change too much in the near future, with the USDA forecasting a further fall in US herd numbers in 2011-further tightening the supply of feeder cattle.