Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 8/23/10

USDA’s monthly Cattle on Feed report issued late Friday showed cattle placed on feed as of Aug. 1, at 1.71 million head, fell 5.9 percent from a year ago. The decline was less steep than analysts expected, however, making the report neutral to slightly positive for processors.

Wall Street analysts, on average, expected cattle placed on feed to decline by about 7.4 percent, according to a poll by Dow Jones.

Total cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 9.9 million head on Aug. 1, up 2 percent from a year ago and 0.4 percent higher than the average analyst pre-report estimate.

Marketings of fed cattle during July totaled 1.90 million, 2 percent below 2009 and slightly lower than analysts were expecting. This is the lowest fed cattle marketings for the month of July since the series began in 1996, according to USDA.

J.P.Morgan analyst Ken Goldman called the report “neutral to slightly positive for packers such as Tyson,” noting the slightly higher supplies than last year as a positive. “All else equal, packers usually make better margins when cattle supply is high,” he wrote in a note to investors.

Still tight
Overall, however, cattle supplies remain tight and are expected to get tighter going into the fall, warned the CME Group’s Daily Livestock Report published by livestock analysts Steve Meyer and Len Steiner.

“We doubt that August and September inventories will follow the above-year-ago pattern of June, July … so cattle numbers at year’s end will again be below year-ago levels,” they predicted.

They also noted supplies of feeder cattle outside of feedlots were 2.6 percent smaller than last year on July 1, “and it’s hard to place cattle that are not there.”

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