By Joanna Newman
NEWS of higher-than-expected numbers of cattle entering US feedlots has dampened market sentiment this week.
During March, US producers placed 1.73 million head in the nations feedlots, a 22% increase above 1998 and well ahead of forecasts.
This jump in placements points to an overhang of market-ready finished cattle in coming months.
Packing activity was in line in March, with an expected 5% year-on-year increase in the marketing rate to slaughter houses at 1.66 million head.
In the wake of the US Department of Agricutures monthly Cattle on Feed report, the Chicago May feeder (store) cattle futures contract ran out of steam and settled yesterday (Wednesday) at 71.6¢/lb (98p/kg), little changed from the past few days of trading.
Packers believe this is a buyers market and have dropped their bids for live animals from 65¢/lb last week to 63¢/lb (86p/kg) currently.
Margins for slaughter activity are attractive currently, due to the cheaper fed cattle prices and some strength in boxed beef values.
While it is still early in the year for a seasonal pick-up in domestic demand, market attention is focussed on US food-aid to Russia as an outlet for US beef
Despite the Kosovo crisis, the US still plans to ship 120,000t of free beef to Russia, probably over the next three to four months depending on logistics.