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Drought fuels 11-year high in U.S. June feedlot cattle placements
July 21, 2017 / 10:30 PM / 5 months ago

Drought fuels 11-year high in U.S. June feedlot cattle placements

    * June placements up 16.1 pct vs year ago
    * June 1 feedlot cattle at 104.5 pct of year ago
    * Report bearish for CME live cattle futures
    * Bi-annual USDA data shows ongoing herd growth

    By Theopolis Waters
    CHICAGO, July 21 (Reuters) - Ranchers placed 16.1 percent
more cattle in U.S. feedlots last month than in June 2016,
making it the most for the month in more than a decade, the U.S.
Department of Agriculture reported on Friday.
    Good profits for feedlots in June allowed them to buy more
calves for fattening for sale to packing plants, said analysts. 
    They said an increasing number of cattle in parts of the
northern Plains were entering feedyards as drought grips the 
region.
    On Monday, Chicago Mercantile Exchange live cattle futures
       deferred contracts may open lower - largely based on 
Friday's report on placement outcome, the analysts said.
    USDA's report showed June placements at 1.770 million head,
up from 1.525 million a year earlier and above the average
forecast of 1.618 million. It was the most for the month since
1.95 million in 2006.
    The government put the feedlot cattle supply as of July 1 at
10.821 million head, up 4.5 percent from 10.356 million a year
ago. Analysts, on average, forecast a 2.9 percent gain.
    USDA said the number of cattle sold to packers, or
marketings, were up 4.0 percent in June from a year ago, to
1.989 million head.
    Analysts had projected an increase of 4.7 percent from 1.912
million last year.
    Worsening drought in the upper Plains resulted in more
cattle taken off grazing land, contributing to
larger-than-anticipated June placements, said U.S. Commodities
analyst Don Roose.
    He said ramped up beef demand was needed to compensate for
increased cattle supplies ahead.
    Livestock Marketing Information Center (LMIC) director Jim
Robb attributed June's cattle placement surge to feedlot
profitability, which encouraged them to pull in more animals
from a broad region of the country - including areas stricken by
drought.
    LMIC calculated that feedlots in June, on average, made a
profit of $210 per steer sold to meat companies versus a roughly
$80 loss a year earlier.
    On Friday the government simultaneously issued the
semi-annual cattle inventory report. It showed the July 1 U.S.
cattle herd at 102.6 million head, up from 98.2 million two
years ago.             
    USDA did not publish the July 2016 cattle inventory data due
to budgetary issues.
    The report suggests the herd continues to expand, said Robb.
He added that the second half of 2017 would be more critical
than the first half, in terms of the rate of expansion, because
of the drought and more heifers entering feedlots.

 (Reporting by Theopolis Waters; Editing by Tom Brown)
  

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