U.S. livestock: Cattle placements top estimates

Chicago | Reuters — U.S. cattle producers placed more animals than expected into feedlots last month, U.S. Department of Agriculture data showed on Friday, raising expectations for big supplies next summer.

The increase in placements will likely pressure futures prices on Monday, brokers said.

Meat producers and buyers are keeping a close watch on herd sizes as an outbreak in China of African swine fever, a fatal pig disease, is reshaping global markets for pork, beef and chicken.

The USDA said 2.09 million head of cattle were placed in feedlots in November, up 4.9 per cent from a year earlier. Analysts surveyed by Reuters were expecting a 1.1 per cent increase.

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“We’re going to have a sharp transition from tight supplies in Q1 to a very well supplied environment for summer,” said Rich Nelson, chief strategist for U.S. broker Allendale.

Most actively traded February live cattle futures crept 0.175 cent higher to 125.8 cents/lb. at the Chicago Mercantile Exchange (CME) prior to the USDA data release (all figures US$). The market has pulled back slightly since setting contract highs of 127.9 cents earlier this week.

January feeder cattle futures ended down 0.45 cent at 144.275 cents/lb.

USDA said there were 12 million cattle and calves on feed for the slaughter market as of Dec. 1, up 2.5 per cent from a year earlier. Analysts expected a two per cent increase.

Marketings of fed cattle during November totaled 1.81 million head, down three per cent from 2018, according to USDA. Analysts expected a 2.2 per cent decline.

On Monday, traders will review separate USDA data on the size of the U.S. hog herd. The quarterly Hogs and Pigs report is expected to show the herd increased 2.9 per cent in the September-November quarter from a year earlier, according to a Reuters survey of analysts.

U.S. farmers have expanded herds to supply slaughterhouses that opened in recent years and amid expectations for increased Chinese demand due to African swine fever. The disease has decimated China’s hog herd and pushed Chinese pork prices to record highs.

One of China’s biggest animal feed producers said it had used a radio transmitter to combat crooks using drones to drop pork products contaminated with African swine fever on its pig farms, as part of a racket to profit from the health scare.

Most actively traded February lean hog futures slipped 0.3 cent, to 70.675 cents/lb., at the CME.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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