March Feedlot Placements Rose For First Time In Five Months, Analysts Say

U.S. beef producers last month increased the number of cattle sent to feedlots for the first time since October as rising prices brightened the industry’s profit prospects following a prolonged slump.

Feedlot placements during March rose 6.2 percent from 1.802 million head in the same month in 2009, analyst Andrew Gottschalk estimated.

There is “growing optimism regarding fed cattle prices and profitability,” Gottschalk, who’s with HedgersEdge.com LLC.

The U.S. Department of Agriculture is scheduled to release its next monthly Cattle on Feed report Friday at 2 p.m. Central time.

Gottschalk’s forecast is close to an average projected increase of 6.6 percent for March feedlot placements, based on a survey of analysts conducted by Reuters.

Cattle futures traded in Chicago are up more than 15 percent this year – in mid-April topping $1 a pound for the first time since September 2008.

The shrinking herd has forced meatpackers to bid more aggressively for slaughter-ready animals. Meanwhile, wholesale beef prices surged near the highest levels in almost two years, reflecting the impending peak-demand summer-grilling season.

Bolstered by the stronger prices, feedlot operators are turning profits after losing money most of the past three years, said Jim Robb, director of the Livestock Marketing Information Center.

Feedlots made about $70 per animal sold to meatpackers in March, the second consecutive monthly profit “after consistent red ink since the summer of 2007,” Robb said.

Placements probably will rise, compared with year-earlier levels, at least through May, Robb estimated. That signals higher beef supplies during the second half of the year, and, potentially, lower prices.

“The increase in placements this spring points to larger fed cattle supplies for late summer and fall,” said Marty Foreman, an analyst with Doane Advisory Services. Foreman projects an 8.4-percent increase in feedlot placements during March.

In trading Thursday morning, April live cattle futures fell 0.4 cent to 99.2 cents a pound, down from a contract high of $1.002 on April 9. June cattle fell 0.35 cent to 95.1 cents a pound.

Friday’s Cattle on Feed report is still expected to reflect the industry’s recent contraction phase.

The total number of cattle on feed as of April 1 was down 2.9 percent from 11.2 million a year earlier, based on the Reuters survey.

Cattle marketings during March rose 4.9 percent from 1.828 million a year earlier, according to the survey.

Source: Bruce Blythe, Business Editor, Vance Publishing

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