By Joanna Newman
THE supply of US cattle is failing to shrink as fast as producers had hoped.
US feedlots are becoming increasingly crowded, with high numbers of feeder (store) cattle entering the pens, most of which are 600-800lb/head (370-500kg). The marketing rate of fed (finished) cattle is struggling to keep pace.
During February 1.79 million cattle were placed in feedlots, up 20% from a year ago, according to the US Department of Agricultures latest monthly Cattle on Feed report.
However, the number of fed cattle marketed to the packing houses shrank 1% from a year ago, to 1.82 million.
Owners had hoped to see a faster slaughter rate to help work through the backlog of cattle in the pens.
Packers anticipated the bearish report by dropping their bids from 66¢/lb to 64¢ last week, then retreated further to 63¢/lb (86p/kg) by Tuesday (23 March) in the wake of the monthly data.
In the futures pit, much of the bad news was already reflected in the market and the report failed to add to the pressure.
Values inched up slightly this week with the Chicago April feeder cattle contract, settling on Tuesday (23 March) at 72.0¢/lb (98p/kg). This is up from 71.6¢ a week ago.
Traders expect that the government will start buying beef for Russian aid programmes, which should lend some support the market.