CHICAGO, Nov 20 (Reuters) - The number of cattle being fattened in U.S. feedlots as of Nov. 1 was up about 1.5 percent from last year's low supply, but remained low historically as the weak economy has discouraged cattle production and hurt beef demand.
The U.S. Department of Agriculture's monthly Cattle on Feed Report, released on Friday, put Nov. 1 feedlot cattle supplies at 11.134 million head, about 1.5 percent above last year. That is only the second time in 19 months the monthly supply has exceeded the previous year's.
'For the most part the numbers came in about as expected,' said Erica Rosa, economist at the Livestock Marketing Information Center. 'We typically expect cattle on feed to increase this time of year as feeder cattle come off of pastures.'
USDA's numbers were close enough to trade forecasts that they should have little effect on Monday's Chicago Mercantile Exchange live cattle futures or on cash cattle prices next week, analysts said.
'The board is essentially almost par with the top end of cash this week and we'll wait and see what cash will be next week,' said Jim Clarkson, livestock analyst with A&A Trading.
Historically the number of cattle being fattened for market is still at low levels despite rising the past few months from below year-ago levels early in the year to above year-ago levels this fall.
'It is still the second lowest November 1 on-feed number since 2003, last year being the lowest,' said Ron Plain, livestock economist at the University of Missouri.
USDA put October placements at 101 percent of a year earlier, which analysts said may be a little supportive to futures as it came under the trade average guess. However, the report showed many of those placements were in the heavier weight categories, which analysts said may mean they will be ready for market sooner.
'There were fewer light cattle and more heavy cattle placed than we expected, which should help push cattle prices down in approximately January and February and push them up in approximately April. All in all, though, this report was more or less neutral for packers such as Tyson Foods,' Ken Goldman, JP Morgan analyst, said in a research note.
The number of cattle moving onto feed, however, has risen over the past few months and that, coupled with a slow marketing pace, resulted in a larger feedlot supply. This will likely result in larger cattle slaughter in the weeks ahead and it will take an improving economy and increased beef demand to support cattle prices.
Fed cattle will likely lose money for feedlots for the balance of 2009 and through January, with profits returning in February and continuing until early summer, Rosa said.
She noted that fed cattle may average $85-$87 in the first quarter of 2010 and $87 to $91 in the second quarter.
The profits will reflect lower feed costs (due to a big corn crop) and an expected slow recovery in the economy next year which should increase beef sales both domestically and for export, she said.
'We do expect we will come slowly out of the recession,' Rosa added.
(Additional reporting by Bob Burgdorfer; editing by Jim Marshall)
((jerry.bieszk@thomsonreuters.com; 312-408-8725; Reuters Messaging: jerry.bieszk.reuters.com@reuters.net)) Keywords: CATTLE DATA (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The U.S. Department of Agriculture's monthly Cattle on Feed Report, released on Friday, put Nov. 1 feedlot cattle supplies at 11.134 million head, about 1.5 percent above last year. That is only the second time in 19 months the monthly supply has exceeded the previous year's.
'For the most part the numbers came in about as expected,' said Erica Rosa, economist at the Livestock Marketing Information Center. 'We typically expect cattle on feed to increase this time of year as feeder cattle come off of pastures.'
USDA's numbers were close enough to trade forecasts that they should have little effect on Monday's Chicago Mercantile Exchange live cattle futures or on cash cattle prices next week, analysts said.
'The board is essentially almost par with the top end of cash this week and we'll wait and see what cash will be next week,' said Jim Clarkson, livestock analyst with A&A Trading.
Historically the number of cattle being fattened for market is still at low levels despite rising the past few months from below year-ago levels early in the year to above year-ago levels this fall.
'It is still the second lowest November 1 on-feed number since 2003, last year being the lowest,' said Ron Plain, livestock economist at the University of Missouri.
USDA put October placements at 101 percent of a year earlier, which analysts said may be a little supportive to futures as it came under the trade average guess. However, the report showed many of those placements were in the heavier weight categories, which analysts said may mean they will be ready for market sooner.
'There were fewer light cattle and more heavy cattle placed than we expected, which should help push cattle prices down in approximately January and February and push them up in approximately April. All in all, though, this report was more or less neutral for packers such as Tyson Foods,' Ken Goldman, JP Morgan analyst, said in a research note.
The number of cattle moving onto feed, however, has risen over the past few months and that, coupled with a slow marketing pace, resulted in a larger feedlot supply. This will likely result in larger cattle slaughter in the weeks ahead and it will take an improving economy and increased beef demand to support cattle prices.
Fed cattle will likely lose money for feedlots for the balance of 2009 and through January, with profits returning in February and continuing until early summer, Rosa said.
She noted that fed cattle may average $85-$87 in the first quarter of 2010 and $87 to $91 in the second quarter.
The profits will reflect lower feed costs (due to a big corn crop) and an expected slow recovery in the economy next year which should increase beef sales both domestically and for export, she said.
'We do expect we will come slowly out of the recession,' Rosa added.
(Additional reporting by Bob Burgdorfer; editing by Jim Marshall)
((jerry.bieszk@thomsonreuters.com; 312-408-8725; Reuters Messaging: jerry.bieszk.reuters.com@reuters.net)) Keywords: CATTLE DATA (For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.