October 28, 2011


US cattle supply peaks


Government data has shown that cattle placed in US feedlots peaked unexpectedly last month, and analysts said this signals for a more than expected beef supply this winter.


Placements, which came in about 3% more than the average trade estimate, helped to lift cattle supply in feedlots by 5% from a year ago -- the 17th straight month of increases.


A drought in southwest that dried up pastures, a drop in corn prices, and higher fed cattle prices combined to put more cattle in feedlots in September, analysts said.


Despite that larger supply, analysts doubt there will be bargains on beef at grocery stores. Higher feed costs and a sharp drop in imported beef have pushed supermarket beef prices to record highs and analysts expect even higher prices next year as the US cattle herd dwindles.


Earlier this week, the USDA reported the average retail beef price in September was a record US$4.91 per pound. USDA also projects 2012 beef production at 25.135billion pounds, down from 2011's 26.42billion pounds.


A drought in the southern Plains withered pastures had forced young into feedlots. While that movement off of pastures has increased current feedlot cattle supplies, analysts claim the pool of feeder cattle is shrinking, which will mean fewer cattle next year.


The USDA reported September placements at 100% of a year ago, but the actual number was up slightly at 2.469million head versus 2.463million a year ago. Analysts, on average, expected 2.39million head, or 97.1%.


In August, placements were down 1% from a year ago, which snapped a consistent pattern of increases the previous several months.


Analysts said placements usually are at the largest during the fall quarter when calves come off summer grazing programs and head directly to feedlots.


The USDA reported the October 1 feedlot supply at 105% of a year ago, or 11.312million head. Analysts on average expected 104%.


USDA put cattle marketings last month at 101% of a year ago, or 1.813million head, while analysts expected 100.8%.


Ron Plain, livestock economist at the University of Missouri, characterised USDA's unexpected placement result as "slightly bearish" but "not a huge miss."


The government's monthly cattle surveys are based on feedlots of 1,000 head or more, and some of the placement increase may be offset somewhat by fewer cattle being fed by smaller farmer feeders, Plain said.

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