The number of cattle placed in U.S. feedlots last month was up 15 percent from a year earlier, a government report showed on Friday, and analysts said reduced feed costs encouraged fattening cattle for slaughter.
The U.S. Department of Agriculture reported April placements at 1.750 million head, or up 15 percent from 1.521 million in April 2012. Analysts, on average, estimated a 13.1 percent increase.
"The price for corn was much lower in April than in March so it made it more attractive to place cattle," said University of Missouri livestock economist Ron Plain.
Chicago Board of Trade corn futures last month averaged $6.70-3/8 per bushel, down from $7.14-3/4 in March. In August 2012 corn set a record high of $8.43-3/4.
In addition, improved weather last month allowed ranchers to move cattle into feedlots, analysts said. Also, April 2013 placements compare with a much smaller placements in April 2012, they said.
Livestock Marketing Information Center director Jim Robb attributed some of the increase in April placements to last year's drought, which tightened hay stocks and forced more cattle into feeding pens.
"Still, overall cattle numbers will remain tight which does not change the outlook for higher beef prices ahead," said U.S. Commodities analysts Don Roose.
Separate USDA data showed the average U.S. retail beef price in April was $5.26 per lb, down from the March all-time high of $5.30 per lb but up from $4.99 a year earlier.
USDA put the feedlot cattle supply as of May 1 at 10.735 million head, or 97 percent of a year earlier. Analysts polled by Reuters, on average, expected 96.1 percent. It was the smallest supply for that date since 10.428 million in 2010.
The number of cattle sold to beef packers, or marketings, in April was up 2 percent from a year earlier at 1.855 million head versus the forecast for a 2.8 percent increase. That was the biggest April marketing figure since 1.857 million in 2010.
The increase was due in part to one more weekday to slaughter cattle this year than in April 2012. Also, fewer cattle were available than a year earlier, analysts said.
Analysts said that while the placements were negative, the recent pullback in Chicago Mercantile Exchange cattle futures prior to the data's release may have factored in the report's bearish implications.
"I think cattle futures are way too low. I don't seen any reason for them to be as low as they are and I don't think this (report) will push them any lower on Monday," said Plain.
U.S. Commodities analyst Roose predicted CME live cattle could start Monday's session 0.200 to 0.300 cent per lb higher.