Chicago | Reuters — The number of cattle put into U.S. feedlots in February climbed 10 per cent from a year earlier to their highest level for that month in eight years, according to a government report released Friday.
The placement results, which shed light on future prices for cattle and beef, surpassed industry forecasts after feedyards benefited from more affordable feed.
Packers paid feedlots a decent price for slaughter cattle, and feedlots spent less for young calves, or feeder cattle, that are fattened for beef.
And commercial feeding pens finally brought in cattle that had been on healthy pastures for several months as feedlots grappled with 15 consecutive months of heavy financial losses.
February’s placement outcome appeared especially large in comparison with the much smaller year-earlier result which was hurt by foul weather and a sluggish cattle herd recovery from severe drought in 2012, experts said.
They said cattle that landed in feedlots in February will begin to arrive at packing plants in June, which should keep a lid on beef and slaughter cattle prices during that period.
Friday’s U.S. Department of Agriculture report showed February placements at 1.71 million head, up 10 per cent from 1.551 million last year and well above analysts’ average forecast of 1.68 million.
It was the biggest number of placements for that month since 1.723 million in February 2008, according to University of Missouri economist Ron Plain.
USDA put the feedlot cattle supply as of March 1 at 10.77 million head, up from 10.688 million a year ago. Analysts, on average, had predicted a marginal increase.
The government said the number of cattle sold to packers, or marketings, rose five per cent in February from a year ago, to 1.591 million head.
Analysts projected a 4.7 per cent increase from 1.516 million last year.
“We’ve had low placements for seven months in a row before this. Now we have this small backlog of available calves and feeders waiting outside of feedlots that need to come back in,” said Allendale Inc. chief strategist Rich Nelson.
Plain said the outlook for feedlots appeared bright given low corn prices and less significant economic losses for feedyards.
He said one extra day in February because of the 2016 leap year resulted in 3.6 per cent more placements for the month.
Analysts called Friday’s placement outcome bearish for Chicago Mercantile Exchange live cattle futures on Monday.
However, they added that market losses prior to the data’s release suggest some traders may have anticipated much larger placement numbers.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.