Cattle On Feed Report Bullish


CHICAGO– The number of cattle placed into U.S. feedlots in September fell 18.8{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} compared with a year earlier, a steeper drop than analysts expected.

The U.S. Department of Agriculture monthly cattle-on-feed report showed

slightly fewer animals in the nation's feedyards than the average of analysts' expectations. In addition, cattle owners shipped fewer animals for slaughter last month than analysts had anticipated.

The USDA reported 2.0 million head of young cattle, known as feeders, were added to feedlots in September. The USDA released the monthly data Friday afternoon. The additions, known as placements, were below the nearly 2.47 million added to feedlots in the same month a year ago and 16.4{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} below the five-year average for the month of 2.40 million. Analysts had on average expected a decrease of 15.0{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05}.

The report was considered mildly supportive for the February-through-April

futures contracts and generally neutral for December.

The total number of cattle in feedlots as of Oct. 1 was nearly 11.0 million.

The on-feed number was smaller than a year ago by about 2.6{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05}, indicating that supplies are tighter following the severe drought in the southwest U.S. last year and the central U.S. and Midwest this year, which sent corn prices to all-time highs this summer. Analysts had expected the on-feed figure to be 2.2{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} below the same time last year.

Poor processing margins despite beef prices being historically high and

tightened supplies have limited the number of animals moving out of the

feedyards to the slaughtering plants as cattle owners resist selling rather

than take steep losses.

The total number of cattle on feed rose 3.3{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} compared to the previous month. The current number of cattle in the nation's feedyards is nearly 1.9{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} larger than the five-year average for Oct. 1 of 10.79 million.

The USDA report put the number of cattle marketed, or sold for slaughter

last month, at nearly 1.60 million, down 11.8{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} compared with a year earlier and 10.0{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} below the five-year average of nearly 1.78 million. Analysts expected marketings to decline by 10.2{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} from a year ago. September this year had two fewer weekdays but one more Saturday than in 2011, which likely accounted for roughly a 9{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} decline in marketings.

The lower-than-expected placements could be considered supportive for the late winter and early spring period but that may already be built into the

market following recent gains, said Rich Albaugh, analyst with Commodity Services Inc.

The marketings are down nearly 12{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} from year ago but not far below the

expected level and would be considered neutral for the December contract, said Rich Nelson, chief strategist with Allendale Inc. He sees potential support of about 0.50 cent a pound for the February and April contracts from the smaller-than-expected placements.

Source: DTN

Posted by Northern Ag Network

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