A decline in U.S. cattle inventory projections this month are expected to be supportive of prices.
USDA in its monthly cattle on feed report Friday projected cattle and calves on feed in the U.S. as of Oct. 1 totaled 10.989 million head, down 3 percent from a year ago.
Placements in feedlots during September totaled just 2.004 million head, down 19 percent from the same time last year. In fact, placements last month were the lowest on record for September since USDA started the current data series in 1996.
“There are a lot of bullish things (in this report) for live cattle prices,” said Rich Nelson, director of research at Allendale Inc. in McHenry. “It certainly should be supportive” of prices.
September marked the fourth consecutive month placements in feedlots dipped below year-ago levels.
“It certainly will tighten the live cattle supply tremendously for the first half of 2013,” Nelson said.
USDA previously projected beef supplies next year will decline by 3.7 percent.
Nelson projected the drop in beef supplies next year could be even more severe than the current USDA projection.
“There still is a lot of resistance to placing cattle in feedlots until profitability returns,” he said. “We’ll be facing tight supplies for at least the next several months.”
USDA on Friday also issued a Canadian cattle report that showed shipments of fed cattle from Canada to the U.S. so far this year are down 8 percent.
“That’s just confirmation that the North American beef supply is tightening up,” Nelson said.
Marketings of fed cattle in September totaled 1.598 million head, down 12 percent. The marketings number was the second-lowest on record for September since 1996.
Futures prices for cattle on Friday were $128 per hundredweight for December, $134 for February, and $138 for April.
Nelson projected cattle prices will climb higher in the wake of the latest inventory estimates.
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