US cattle bounce back after bearish week

By Joanna Newman

IT has been a volatile week for the US cattle market, with prices buffeted by bearish news of increased supply and some positive rumours concerning food aid to Russia.

The Chicago live cattle April futures contract dropped from 67.6¢/lb last Tuesday (16 February), to 66.5¢ at the start of this week before bouncing back to close Tuesday (23 February) at the same level of 67.6¢/lb (92.95p/kg).

The latest Cattle on Feed report shows that a larger than expected supply of feeder cattle entered US feedlots during January.

A total of 1.92 million head have been placed in feedlots, which is an 11% increase from last year.

While this has been good news for the maize market, suggesting an increase in feed grain demand, cattle prices reacted negatively.

The number of finished cattle leaving the feedlots for slaughter is struggling to keep pace.

Marketings from feedlots to packing houses during January rose only 2% to 2.02 million head.

Total cattle slaughter, including those not coming from feedlots, actually fell 3% during January to 2.96 million head, according to the monthly US Departent of Agriculture livestock slaughter report.

Overall, the data paint a picture of crowded pens at the feedlots and ample supply available to the slaughter houses.

Meanwhile, on the export front, more news trickled through this week about the $260 million (£162 million) of beef food-aid to Russia, with the first shipments slated for March. This helped trigger the rebound in prices this week.

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