US cattle placements fall to 16-year low in October

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The number of cattle placed in U .S. f eedlots for fattening fell 13 percent in October to the smallest in 16 years for the month, a government report said on Friday, ref lecting high feed costs during the worst drought in half a century.

The U.S. Department of Agriculture's cattle-on-feed report showed the number of cattle arriving at feedlots in October at 2.180 million head, falling for a fifth straight month.

The 13 percent fall from a year earlier puts October placements at the smallest for the month since the USDA began the data series in 1996. Analysts polled by Reuters, on average, expected a 12.6 percent drop in placements.

September placements fell 19 percent to its lowest on record for that month.

The government put supply of cattle in feedlots on Nov. 1 at 11.254 million head, or 95 percent of the year-ago total, versus expectations for 94.7 percent.

And, USDA said the number of cattle sold to packers, or marketings, in October was u p 3 percent from a year earlier, to 1.837 million head versus expectations of a 2.5 percent increase.

Analysts viewed Friday's cattle report as neutral to mildly supportive for Chicago Mercantile Exchange live cattle on Monday. B ut how prices will trend when the markets reopen will depend on other factors too, like investor sentiment in the stock market, the dollar and the economy.

Feed yards lost money on cattle they purchased from ranchers and sold to packing plants a fter fattening them a s the d rought pa rched pastures, sending feed grain prices to all-time highs last summer and doubled the cost for hay.

The pool of younger cattle had also diminished after last year's drought in the U.S. southwest shrunk the herd to its smallest in 60 years -- resulting in fewer cattle now.

Allendale Inc. chief strategist Rich Nelson, called the report g enerally n eutral because the data was "pretty much what was expected" with deferred contracts likely benefiting from the 13 percent decline figure.

"Feedlots don't want to put any new calves in their pens now given their struggles with high feed costs and placements reflect a drop in live cattle numbers for 2013," said N elson.

"But, what's going on with the stock market will be a bigger deal than this report, " he said.

Dan Vaught, president of Vaught Futures Insights, said deferred trading months may continue to be supported given the drop in placements for a fifth month i n a row.

"But, it will be interesting to see how the December contract will perform because a 3 percent increase in marketings when there were two extra workdays for the month is not at all impressive," he said.



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