The number of cattle being fattened for beef rose by more than expected last month while meat in cold storage surged, data showed on Friday, as a severe Southern drought forced ranchers to sell stock quickly. Live cattle prices are likely to fall on Monday, extending a 15 percent slide since they hit a record in early April.
That could in turn help cool world food prices that are hovering near record highs, stoking concerns about accelerating inflation and unrest in poorer countries. The increase in cattle has been widely attributed to droughts in Texas, Oklahoma and Mexico that forced cattle off of pastures and into feedlots. That should mean ample cattle for beef packers like Tyson Foods Inc, JBS SA, and Cargill Inc.
"We just confirmed that we will have big numbers ahead and that is good for the packing plants," said Don Roose, analyst at US Commodities Inc. "We have more beef and pork in storage than a year ago and we have more beef coming at us." The US Agriculture Department on Friday reported 11.2 million cattle in feedlots on May 1, the most for that date since 2007. That is up 7 percent from a year ago, and more than the 5 percent increase that analysts had expected.
Placements, or the number of young cattle sent by ranchers to the feedlots where they are fattened for slaughter, rose 10 percent from a year ago to 1.795 million head. That is second-highest placement number on record and the 10 percent increase was double the 5 percent increase analysts had expected.
"It appears the weak forage conditions in the Plains and record high live cattle prices provided added incentive," said Rich Nelson, analyst at Allendale Inc. Monthly cattle placements have been above a year ago every month but two in the past year. The increases have surprised analysts as they are occurring despite the smallest US cattle herd since 1958.