Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 7/27/09

USDA on Friday released its monthly Cattle on Feed report as well as it Cattle Inventory report, which were generally in line with market expectations and provided further evidence of a shrinking cattle herd.

The total cattle inventory on July 1, at 101.8 million head, was 1.5 percent lower than a year ago and indicated the smallest herd since USDA started tracking the inventory in 1973.

Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 9.8 million head on July 1, 2009. The inventory was 5 percent below July 1, 2008.

Placements in feedlots during June totaled 1.39 million, 8 percent below 2008, USDA reported, the second lowest placements for the month of June since the series began in 1996. Market analysts were looking for about a 7 percent drop, according to Dow Jones.

Cattle on feed July 1, 2009, from all feedlots in the United States, totaled
11.6 million, down 5 percent from the 12.2 million on July 1, 2008.

Marketings of fed cattle during June totaled 1.99 million, 1 percent above 2008. This is the second-lowest fed cattle marketings for the month of June since the series began in 1996.

"This suggests higher than expected cattle prices over the near and medium term, which all else equal could be mildly negative for packers such as Tyson," J.P.Morgan analyst Ken Goldman wrote in a note to investors.

The CME's Daily Livestock Report summed up the report like this: "Overall, the take away from this report is that the U.S. cattle industry continues to contract and cattle numbers will remain smaller for the next two years, possibly even longer."

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