US cattle producers risk surplus

By Joanna Newman

US cattle markets have taken in their stride data showing a 4% year-on-year increase in the number of cattle in feedlots.

The number of feeder cattle intended for the slaughter market and in feedlots with a capacity of more than 1000 head grew to 9.6 million at he beginning of July.

This is 4% more than a year ago, according to the United States Department of Agriculture, but it is roughly in line with expectations.

However, the latest monthly Cattle on Feed report shows some mixed trends.

The quantity of cattle marketed to packers reveals an encouragingly high slaughter rate – up 5% from last year, at 2.1 million cattle. But there has been a large increase in the number of cattle entering the feedlots, which could point to oversupply in a few months.

Placements climbed a worrying 14% year-on-year, to 1.8 million head in the month of June.

Feeder cattle futures prices have responded by losing ground. The Chicago August contract closed on Monday (19 July) at 76.6¢/lb (107p/kg), off a cent from last week. A recovery in maize prices also helped depress feeder values.

On the other hand, the live cattle contract, for heavier, market-ready animals, climbed in the wake of the Cattle on Feed report, up at 64.1¢/lb (90p/kg), a gain of a cent from a week earlier.

Meanwhile the cash market price paid by packers has been stable at around 64¢/lb (89.7p/kg).