By Joanna Newman

OVER the past week, the US cattle market has managed to shrug off a bearish report on the supply of feeder (store) cattle and has continued its recent rally.

The US Department of Agriculture monthly cattle on feed report shows that the number of feeder cattle placed in the pens climbed 5% year-on-year to 1.67 million head during April, compared with expectations of a decline.

The marketing rate of fat (finished) cattle leaving the feedlots for slaughter grew 3% from a year ago to 1.93 million head, in line with expectations.

The high placements figure suggests a bulge in the supply line resulting in an overhang of market-ready animals in the summer.

However, domestic demand seems able to cope. Strong seasonal beef demand has already pushed up beef prices and encouraged livestock producers to ship animals to the packers at lighter weights.

This trend of lighter slaughter weights should help offset the larger number of feeder cattle placed in feedlots this spring.

With the Memorial Day holiday weekend (29-31 May) around the corner, beef prices have performed strongly, rising to their highest level in a couple of years.

The boxed beef cut-out value for lightweight Choice grade is currently at 112¢/lb (153p/kg).

This in turn has helped the Chicago August feeder cattle futures contract, which closed at 74.6¢/lb (102p/kg) on Tuesday (25 May).

This was little changed from a week ago, but up from about 72¢ at the start of the month.

Cheaper grain is also lending support to cattle values. Maize prices have declined 3% over the past week, cutting cattle producers cost of weight gain.