USDA’s monthly cattle on feed update came out fairly close to pre-report expectations but do project tighter supplies in the coming months.
Placements during July were 1.922 million head, down 10% from the July 2011 record, with additional pressure from heavy losses on outgoing cattle. Ahead of the report, the average guess was for an 8.6% decline. The bulk of placements were heavier weight cattle, 700 pounds and up; 600 pounds and under were 500,000 head, 600 to 699 pounders were 325,000 head, the 700 to 799 pound category was 470,000 head, and the 800 pound and heavier cattle totaled 627,000 head.
July marketings were slightly lower than last year at 1.913 million head, while analysts were anticipating a 1.6% increase. Other disappearances dropped 11% to 63,000 head.
The total number of cattle on feed as of August 1 was up 1% from a year ago at 10.656 million head. Before the report, analysts were expecting a 0.7% increase.
With the near term supply a little larger than expected, the report looks slightly negative for now, but down the road, supplies will tighten, which should support prices.
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