Drought Affects Cattle on Feed - Supplies to Remain Tight

ANALYSIS - Last Friday, the USDA released the number of cattle on feed as of 1 September 2012. The numbers are much worse than pre-report predictions and clearly reflect the impact of this year's drought, writes Charlotte Johnston, TheCattleSite editor.
calendar icon 27 September 2012
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Total inventory of cattle on feed was 10.637 million head, 63,000 head or 0.6 per cent lower than a year ago.

Whilst August generally tends to see above average placements of cattle, large drought induced placements in July saw numbers in August much lower than many expected.

Placements in feedlots during August totalled two million, 11 per cent below 2011 numbers.

This is the second lowest cattle placements for the month of August since the National Agricultural Statistics Service began the series in 1996.

Prior to the report analysts on average were expecting placements to be down 7.3 per cent.

Record-high feed costs will be influencing decisions to place cattle on feed, and many will be keeping calves out of the feedlot for as long as possible to minimise costs.

Pressure on feeder and packer margins saw the number of cattle marketed at 1.96 million. Five per cent below 2011 and much lower than the most pessimistic pre-report forecasts.

On top of this imports of fed cattle, which have been compensating for a drop in US production, are likely to fall in coming months. The drought in Mexico has been the main driver for increased imports, however this is expected to slow down in coming months.

With this in mind, the question many are asking is how will feedlots maintain feedlot inventories?

Industry forecasts indicate that cattle and beef supplies will become even tighter over the coming months.

Further Reading

You can view the full report by clicking here.
Charlotte Johnston, Editor

Charlotte Johnston - Editor

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