Chicago | Reuters — U.S. feeder cattle futures and deferred live cattle futures finished higher on Monday after the government reported placements in feedlots were lower than analysts expected last month.
The U.S. Department of Agriculture, in monthly data issued after the close of trading on Friday, said producers placed 3.8 per cent more cattle into feedlots in October than a year earlier, below analysts’ expectations for a 4.9 per cent increase.
The increase indicates U.S. beef supplies will be more plentiful early in 2024 as the cattle grow heavy enough to be slaughtered, analysts said. Supplies will tighten later next year as fewer cattle will be available to place in feedlots and process into meat, they said.
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Years of drought have reduced the U.S. herd, and dryness continues to drive producers to send cattle to slaughter because of a lack of grass available for grazing.
“We’re still culling the herd,” said Dennis Smith, commodity broker for Archer Financial Services.
Chicago Mercantile Exchange (CME) February 2024 live cattle futures slipped 0.15 cent to end at 176.65 cents/lb., though all subsequent contract months finished slightly stronger (all figures US$).
CME January 2024 feeder cattle closed 1.35 cents higher at 229.85 cents/lb. and hit the highest price since Nov. 9.
Cattle placements in Kansas, where 76 per cent of the state’s cattle are in abnormally dry areas, drove up overall U.S. placements. The state saw October placements jump 7.3 per cent from the previous year and it had 8.2 per cent more cattle on feed as of Nov. 1.
Nationwide, 11.9 million cattle were on feed for slaughter on Nov. 1, up 1.7 per cent from a year earlier and near analysts’ expectations.
“This is an artificially high placement number,” Smith said.
“This thing down the road is going to get tighter and tighter and tighter.”
In CME lean hog futures, the December contact slumped 0.625 cent to settle at 70.35 cents/lb.
China, the world’s biggest pork producer and consumer, had a bigger sow herd at the end of October than needed, state media reported.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
