By Joanna Newman
US cattle prices plummeted in reaction to Fridays Cattle on Feed report which announced that the industry is failing to work through the backlog of cattle as fast as hoped.
The number of store cattle entering the nations feedlots for fattening on grain rations fell by only 3% year-on-year to 2.83 million in October.
Nor was the slaughter rate of fed cattle as high as expected. The number of cattle marketed to the packing houses from the feedlots fell 2% from a year ago, to 1.77 million head during October.
Overall, the population of cattle in feedlots shrank by a mere 2% from last year to 0.76 million head, still up a worrying 7% from two years ago.
The Chicago December futures contract for live (fed) cattle dropped from just under 64¢/lb ahead of the news to 62.5¢/lb on Monday 16 November, before recovering some ground to close on Tuesday at 62.7¢/lb. In the cash market, packers bids dropped from 63¢/lb last week to 61¢ following the news on Friday.
Producers are scrambling to find good news, and pinning hopes on a US Department of Agriculture food aid package to Russia which could see 120,000 tonnes of beef shipped to Russia in the coming weeks. A seasonal rally in beef demand over the holiday period could also help to support the market.