Fewer cattle placed in U.S. feedlots in May than anticipated

Chicago | Reuters –– The number of cattle placed in U.S. feedlots last month was lower than anticipated, a government report showed on Friday, reflecting healthy pastures that allowed ranchers to grow livestock longer outside of feedyards, said analysts.

Producers retained more heifers to help restore the U.S. cattle herd, now at its third lowest level since 1952 following several years of drought-stricken crops.

Feedlots purchased fewer expensive young calves, or feeder cattle, because they pressured their margins.

Cattle placed in feeding pens in May will likely come to market beginning in September which could help support prices for slaughter-ready animals at that time, the analysts said.

Related Articles

The U.S. Department of Agriculture (USDA) report showed May placements at 1.714 million head, down 10 per cent from 1.909 million last year.

Analysts, on average, had expected a placement reduction of 7.2 per cent in May.

The USDA put the feedlot cattle supply as of June 1 at 10.561 million head, up one per cent from 10.497 million a year ago. Analysts, on average, had forecast a 0.7 per cent rise.

The government said the number of cattle sold to packers, or marketings, was down eight per cent in May from a year ago, at 1.711 million head. The outcome was the smallest for the month of May since USDA began the data series in 1996.

Analysts projected a drop of 7.8 per cent from 1.865 million last year. There was one less day to market cattle in May 2015 than the same period a year earlier.

Pasture conditions are some of the best in years, so the feeders outside of feedlots are historically large, said U.S. Commodities analyst Don Roose citing May 2015’s slower-than-expected placement pace.

Dan Vaught, economist with Doane Advisory Services, said last month’s Chicago Mercantile Exchange live cattle futures that traded in a range from the upper 140 cents to lower 150 cents per pound discouraged some ranchers from sending their cattle to feedyards.

“In May, the futures market was telling the feedlot industry that the outlook isn’t all that great,” said Vaught.

On Monday, CME live cattle futures deferred months may benefit from the report’s placement shortfall, while nearby contracts may take their cue from current slaughter cattle prices and wholesale beef demand, said analysts.

“It’s going to be how beef clearances are next week. The back months are going to find support and that’s going to give us a push up front, too,” said Roose.

Theopolis Waters reports on livestock markets for Reuters from Chicago. Additional reporting for Reuters by Michael Hirtzer.

About the author

explore

Stories from our other publications