January 26, 2018 / 11:44 PM / a year ago

Drought lands more cattle into U.S. feedlots than expected

    * December placements up 0.8 pct vs year ago
    * Jan. 1 feedlot cattle at 108.3 pct of year ago
    * December marketing down 1.4 pct vs last year
    * Report mildly bearish for CME live cattle futures

    By Theopolis Waters
    CHICAGO, Jan 26 (Reuters) - Ranchers sent nearly 1 percent
more cattle to U.S. feedlots in December than the same time a
year earlier, the U.S. Department of Agriculture reported on
    The result topped most analysts' predictions, mainly led by
worsening drought in the U.S. southern Plains that shriveled
available winter wheat grazing pasture.
    Corn Belt states were the recipients of cattle from areas of
Montana, North Dakota and South Dakota where insufficient
moisture persists.
    "These very dry conditions that are developing in wheat
pasture country drove change in placements in November. And I
suspect we got some of that in December also," said Texas A&M
University economist David Anderson.
    Some analysts cited cheaper feed, which lowered input costs
for feedlots, as another reason behind last month's placement
    And more heifers are entering feedyards, suggesting to
analysts that the rate of cattle herd expansion is slowing. 
    On Monday Chicago Mercantile Exchange live cattle futures
       may open lower following USDA's report, but could quickly
rebound spurred by higher-than-expected prices for market-ready,
or cash, cattle later on Friday.
    USDA's report showed December placements at 1.799 million
head, up 0.8 percent from 1.785 million a year earlier and
exceeded the average forecast of 1.730 million. 
    The government put the feedlot cattle supply as of Jan. 1 at
11.489 million head, up 8.3 percent from 10.605 million a year
ago. Analysts, on average, forecast a 7.7 percent rise.
    USDA said the number of cattle sold to packers, or
marketings, were down 1.4 percent in December from a year ago to
1.752 million head.
    Analysts had projected a 1.2 percent drop from 1.777 million
last year.
    "The big placement figure tells you that we're going to have
big numbers of cattle coming at us for the foreseeable future,"
said U.S. Commodities President Don Roose. He too alluded to the
bump in feedlot cattle placements in Corn Belt states where feed
is more plentiful.
    "You continue to be in a drought in the Southern Plains,
that continues to expand, so it no doubt is another factor that
you have to throw into the placement discussion," said Roose.

 (Reporting by Theopolis Waters in Chicago; Editing by Lisa
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