U.S. feedlot cattle placements rise as feed costs declined

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Reuters / The number of cattle placed in U.S. feedlots in September increased one per cent from a year earlier, a government report showed Oct. 31.

Analysts attributed the rise to lower-priced corn, which reduced the cost of fattening cattle in feedlots. Also, higher prices for slaughter-ready cattle improved margins and drew more animals into feedlots.

The U.S. Department of Agriculture showed September placements at 2.025 million head, up one per cent from 2.004 million a year earlier. Analysts, on average, expected a 1.2 per cent increase.

Although up from last year, September placements were the second lowest for the month since USDA began the current data series in 1996. USDA reported the feedlot cattle supply as of Oct. 1 at 10.144 million head, down eight per cent from a year earlier. Analysts, on average, expected a 7.3 per cent drop.

The supply has been declining and is now at the lowest level for the month in 15 years. The number of cattle marketed to packers in September was up six per cent from a year earlier at 1.695 million head.

Analysts viewed the report as neutral to mildly bullish for Chicago Mercantile Exchange live cattle futures.

“There was not much difference between the estimates. It is pretty neutral for the market,” said Ron Plain, University of Missouri livestock economist.

The September marketings were encouraging, which were slightly higher than trade expectations, he said.

The increase in cash prices during the last two weeks in September and improved feedlot profitability as corn became more affordable attracted cattle into feedyards, said Allendale chief strategist Rich Nelson. The placement data suggests the trend of low placements will continue into the first half of 2014, which should help support deferred CME live cattle futures, he said.

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