U.S. cattle ranchers in March placed 11.0 percent more cattle into feedlots than a year ago, the U.S. Department of Agriculture reported on Friday, which topped analysts' forecast and notched a record high for the month.
In March packing plants paid feedyards more money for cattle, which enhanced feedlot profits enough for them to buy more calves for fattening.
Ranchers moved animals to feedlots as quickly as possible to take advantage of higher cattle prices, while avoiding what could be lower returns later based on deferred-month Chicago Mercantile Exchange live cattle futures.
Cattle driven into feedyards in March may begin arriving at meat packing plants in September, which could mean $111 to $112 per hundredweight (cwt) cattle prices then, said Allendale Inc chief strategist Rich Nelson.
How beef prices will respond during that period will largely depend on demand and competition from increased pork supplies, analysts said.
USDA's report showed March placements at 2.102 million head. That was up 11.0 percent from 1.892 million last year and bested the average forecast of 2.015 million. It was the most since USDA began tabulating the data in 1996.
The government put the feedlot cattle supply as of April 1 at 10.904 million head, up from 10.853 million a year ago. Analysts, on average, forecast a 0.3 percent decrease.
The government said the number of cattle sold to packers, or marketings, grew 10.0 percent in March from a year ago, to 1.914 million head.
Analysts had projected a 9.4 percent rise from 1.911 million last year.
Record-high March placements reflect the feedlots' return to profitability after cattle sold to packers $6 per cwt higher than in February, Nelson said.
U.S. Commodities analyst Don Roose described last month's larger-than-anticipated cattle placement result as "a perfect storm" of good U.S. beef exports, strong cattle prices and tight supplies in parts of the Plains based on reduced animal weights.
"What was expected to be 7 percent more cattle than a year ago through the summer, may turn out to be around 3 more than a year ago because the tonnage isn't there," Roose said.
Analysts said CME live cattle futures on Monday might open steady to moderately lower, rather than down sharply, as a result of Friday's report.
"I think traders come Monday will be looking at beef demand for spring grilling and cattle prices next week based on these tight cattle numbers," Roose said.