The number of cattle placed in U.S. feedlots last month rose unexpectedly, a government report showed last week, in what looked like a catch-up movement from ranches after harsh winter weather in February delayed their arrival for fattening.
The U.S. Department of Agriculture showed the number of cattle put into feedyards in March rose 6 percent from a year earlier to 1.899 million head. The average analyst estimate was for a 1.5 percent decline. Placements were the most for the month of March since 2011 when they were 1.914 million.
"All placement weight categories were above year ago and we're finding it very difficult to explain where the placements came from," said Livestock Marketing Information Center director Jim Robb.
Analysts said wintry weather in February created a backlog of young cattle that landed in feeding pens in March.
Because corn prices did not come down until the waning days of March, analysts discounted speculation that cheaper feed caused feedyards to bring in more younger cattle then.
The hardest placement number in the report to explain is the increase in Texas because Mexican feeder cattle imports slowed after ranchers there suffered from prolonged drought, said Robb.
U.S. Commodities analyst Don Roose said: "Guys (ranchers) were moving cattle to the feedlots at a loss. Prices for feeder cattle were under a lot of pressure, and if they (ranchers) turned them over they could replace them with cheaper feeders."
Increased placements suggest a few more cattle will come to market in late summer, early fall. Still, record-high beef prices are expected the rest of this year with cattle supplies seen tight through 2015, analysts said.
The average U.S. retail beef price during March hit an all-time high of $5.30 per lb, surpassing the $5.15 November record, and was up from $5.05 a year ago, according to the USDA's Economic Research Service.
USDA put supply of cattle in feedlots on April 1 at 10.909 million head, or 95 percent of the year-ago total. Analysts polled by Reuters, on average, expected 94 percent.
The government said the number of cattle sold to packers, or marketings, in March was down 8 percent from a year earlier, to 1.771 million head versus forecasts for a 6.4 percent decrease. March 2013 marketings were the smallest for the month since 1.764 million in 1997.
The marketing number was lower than the pre-report estimates but not out of line given one fewer day to slaughter cattle, said Robb.
"The pre-report estimates were implying that some of these larger feedlots marketed more aggressively than they did," he said.
Analysts said the larger-than-expected placements and lower marketing results could cause live cattle contracts at the Chicago Mercantile Exchange to open as much as 0.750 cents per lb lower on Monday morning.
They said trying to predict how much traders will respond to Friday's report is difficult given the already bearish tone in the futures market.
"Compared to people's thoughts ahead of time its (placements) are going to be taken as a negative, probably for the August, and to a larger extent, October futures," said Doane Advisory Services analyst Marty Foreman.