Market News

USDA reports big drop in cattle placements

USDA’s monthly cattle on feed update showed a much larger than expected drop in placements and marketings.

Placements during August came out at 2.002 million head or down 11% from a year ago, the second lowest for the month since the series of reports started in 1996. That reflects an even greater than expected tightening of cattle supplies due to drought, which will lead to smaller beef supplies and higher prices down the road. Before the report, the average guess was for a 7.3% decline but the range of estimates was fairly wide, with the low end calling for an 11.8% drop.

Net placements were 1.94 million head. Placements of cattle and calves weighing less than 600 pounds were 482,000 head, 600 to 699 pounds were 385,000 head, while the 700 to 799 pound placements were 475,000 head and placements weighing 800 pounds and heavier were 660,000 head.

August marketings were 1.960 million head, 5% less than this time last year, while on average analysts were expecting a 1.5% decline.

The total number of cattle on feed in the U.S. as of September 1 was pegged at 10.637 million head, down 1% on the year and at the low end of the pre-report range.

Other disappearances last month were 61,000 head, 15% lower than during August 2011.