Fewer young cattle moved into U.S. feedlots for fattening last month as high feed grain prices likely discouraged producers from wanting to feed them, the U.S. Department of Agriculture and analysts said on Friday.
That left many young steers and heifers on pastures that had not yet been damaged by drought, analysts said.
USDA’s cattle-on-feed report on Friday showed June placements at 1.664 million head, down nearly two per cent from a year earlier. Analysts polled by Reuters, on average, expected a 1.4 per cent drop in last month’s placements.
Analysts viewed the USDA cattle report as neutral because the placements, the July 1 feedlot supply and the marketing data were close to the averages of trade estimates.
"I’m not expecting any point movement on Chicago Mercantile Exchange (CME) futures based on this report," said University of Missouri economist Ron Plain.
Livestock Marketing Information Center director Jim Robb said traders will focus on sluggish beef demand and drought-fueled feed prices rather than the report.
Supplies up, marketings fall
The July 1 feedlot cattle supply was 103 per cent of last year at 10.71 million head. USDA rounds to the nearest percent, and the actual supply was 102.66 per cent, which was very close to analysts’ average of 102.7 per cent.
The 10.71 million was largest July 1 on-feed supply since 2007’s 10.737 million.
However, Robb pointed out the total feedlot cattle may be smaller than the 103 per cent.
USDA’s semi-annual cattle inventory report also released on Friday showed the total feedlot supply up only one per cent, Robb said. The inventory report includes feedlots of all sizes, not just those of 1,000 head or more that are surveyed in the monthly feedlot report.
USDA reported cattle marketings in June at 94 per cent of a year ago, or 1.965 million head.
Marketings were down mostly because there was one less day to send cattle to packers in June 2012 versus last year, said analysts.
The inventory report showed the U.S. cattle herd continued to decline in the first half of 2012, which analysts said was due to last year’s devastating drought in the southwest U.S. and to costly feed.
The inventory report put the total U.S. cattle herd as of July 1 at 98 per cent of a year ago, or 97.8 million head.
"The (inventory) report may be regarded as relatively supportive and implies that the U.S. cattle population is continuing to trend downward fairly rapidly," said Dan Vaught, president of Vaught Futures Insights.
Don Roose, analyst at Iowa-based U.S. Commodities, said the calf crop at 98 percent year-over-year implies the cattle business has yet to move into a rebuilding phase.
A separate USDA report showed total beef stocks as of June 30 at 470.8 million pounds, the most ever for that date. That supply was down five per cent from May, but up nine per cent from a year ago.
Roose attributed the larger year-over-year beef stocks to poor domestic demand tied to the shaky economy and the strong dollar that hurt exports.
USDA reported June 30 U.S. pork inventories at 591.7 million lbs., also the most ever for that date. That supply was down seven per cent from the previous month but up 20 per cent from last year.
Vaught said pork starting building up as high pork prices since last fall slowed domestic sales. Some of that price surge was due to sales to China, which that later slowed.
— Theopolis Waters writes for Reuters in the Chicago area. Additional reporting for Reuters by Meredith Davis and Michael Hirtzer.