February 27, 2004



US Feedlots Limit Feeder Cattle Purchase


US feedlots have limited their purchases of feeder cattle on detection of mad cow disease in January.


During January, cattle placements fell 16% (or 34,000 head) to 1.75 million head compared with the same month last year.  US supplies of beef have increased as product previously destined for export markets was returned to the US following the BSE announcement on 23 December. 


Despite the significant fall in January demand, feeder cattle prices averaged 9.5% above year ago levels, to 89US¢/lb lwt in January.  The ban on live cattle imports from Canada, imposed since May, has reduced supplies of feeder cattle and helped sustain prices at or above year ago levels.


The reduction in fed cattle prices caused a 10% (190,000 head) fall in January feedlot marketings, at 1.78 million.  US January cattle slaughter fell 14% (430,000 head) from the same month last year to 2.58 million head, in response to the closure of the majority of US beef export markets.  US beef exports accounted for 10% of total US beef production in 2003. 


The number of cattle on feed was up 4% as at 1 February 2004, year on year, as the large numbers of cattle placed on feed in late 2003 remained in feedlots.  Although US cattle typically remain on feed for approximately four to five months, due to the lower prices on offer at present, the time on feed is likely to be extended.  


Consequently, US cattle slaughter is expected to remain below year ago levels while major beef export markets remain closed. 


Due to the extended time that cattle are on feed, carcase weights are expected to lift, resulting in production rising relative to the numbers of cattle slaughtered.

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