August 25, 2017 / 9:12 PM / 10 months ago

U.S. July feedlot cattle placements smaller than expected

    * July placements up 2.7 pct vs year ago
    * Aug. 1 feedlot cattle at 104.3 pct of year ago
    * Report bullish CME live cattle futures

    By Theopolis Waters
    CHICAGO, Aug 25 (Reuters) - Ranchers in July placed 2.7
percent more cattle in U.S. feedlots than a year ago, the U.S.
Department of Agriculture reported on Friday, which fell short
of average analysts' forecasts.
    Dwindling profits for feedyards, after being paid less for
their cattle by packers, discouraged them from buying calves for
fattening on their way to beef processors, said analysts.
    They said fewer cattle are now winding up in commercial
feeding pens after ranchers rushed them to market earlier than
they had planned to avoid lower prices expected in the coming
months amid increased supplies.
    Cattle that entered feedlots in July could begin arriving at
packing plants in early 2018. 
    On Monday, Chicago Mercantile Exchange live cattle futures
       could open higher in response to the report's bullish
placement outcome, the analysts said.
    USDA's report showed July placements at 1.615 million head,
up from 1.572 million a year earlier and below the average
forecast of 1.670 million. Still, it was the largest July
placement figure since 1.684 million in 2013.
    The government put the feedlot cattle supply as of Aug. 1 at
10.604 million head, up 4.3 percent from 10.165 million a year
ago. Analysts, on average, forecast a 4.7 percent increase.
    USDA said the number of cattle sold to packers, or
marketings, were up 4.1 percent in July from a year ago, to
1.784 million head.
    Analysts had projected a gain of 4.9 percent from 1.713
million last year. 
    "Cattle feeders are facing clear losses in the months ahead
due to their very heavy placement schedule in the previous eight
months," said Allendale Inc chief strategist Rich Nelson.
    The Denver-based Livestock Marketing Information Center
calculated that feedlots in July, on average, made a profit of
$40 per steer sold to meat companies versus $84 the month
before. They project August margins at minus $20 per head.
    Friday's report will ease some concerns about supplies
during the first half of 2018, but does not change the outlook
for significant cattle numbers during the fall, said Nelson.
    Texas A&M University economist David Anderson agreed that 
"pulling cattle ahead" left fewer animals placed into feeding
pens in July - which historically tends to top June placements.
    He pointed out that some feedlot placements in Corn Belt
states rose, partly due to livestock that continue to be
displaced by drought in the Northern Plains.

 (Reporting by Theopolis Waters in Chicago; Editing by Matthew
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