Chicago (Dow Jones) – The number of young cattle added to feedlots in June climbed 4.1% versus a year ago as drought-stricken producers sold animals to feedlots earlier than expected.
Feedlots added 1.7 million young animals, which are known as feeders, during June. Analysts surveyed by Dow Jones Newswires expected the USDA to show feedlot placements dropped 7.6% versus a year ago, to 1.58 million.
Analysts general expected to see fewer placements after the severe drought in the southern U.S. pushed producers to sell their animals earlier this year before they intended, leaving them with fewer mature feeder cattle to sell. But the drought and recent weeks’ summer heat wave pressed many producers to sell even more cattle that they had hoped to sell in late summer or even autumn.
The discrepancy between analyst forecasts and the actual placements was the widest analyst miss since July 2006, said Scott Miller, head of Scot A. Miller and Associates. The report is considered likely to weigh on prices Monday, perhaps sending the market sharply lower.
The USDA released its semiannual cattle-inventory and monthly cattle-on-feed reports Friday, after trading closed.
The negative impact from the number of cattle-on-feed could be mitigated, but only slightly, by the higher-than-expected marketings, Miller said. The marketings would lend support to nearby contracts, he said.
Meanwhile, all the cattle being pushed to feedlots now means there will be less feeder cattle later, said Tom Leffler, head of Leffler Commodities. The unknown, analysts said, is when that flow of cattle to feedlots will start to thin.
The USDA cattle inventory report showed a total nationwide herd of 100 million head, or 1.1% fewer than July 1 of last year. Beef cows, at 31.4 million, were down 1% over last year.