US feedlots buy 15% fewer cattle as animal supplies shrink

May 18 (Bloomberg) -- Feedlots slashed purchases of young cattle by 15 percent in April as the number available for sale shrank, and improved pasture conditions allowed animals to stay on grazing areas.

Feedlots bought 1.521 million head of cattle last month, down from 1.785 million in April 2011, the U.S. Department of Agriculture said today in a report. Thirteen analysts surveyed by Bloomberg News projected a 12 percent drop, on average. The feedlot herd totaled 11.110 million as of May 1, down 0.6 percent from a year earlier. Analysts expected a 0.3 percent gain.

Better pasture conditions and smaller supplies of animals contributed to the drop in feedlot purchases, or placements, last month, according to the Livestock Marketing Information Center in Denver. The U.S. cattle herd was the smallest since 1952 as of Jan. 1 as a drought in the South scorched pastures, spurring ranchers to cull herds and sell animals to feedlots earlier than normal. Ranchers sold more cattle in February, November, September, June and July than in the same months in the previous year.

“Feedlot placements are falling off like a stone due to poor feedlot profitability, but more importantly, because of a lack of available cattle to put on feed,” Troy Vetterkind, the owner of Vetterkind Cattle Brokerage in Chicago, said in an e- mail before the report. “This is bringing our total on-feed population even with a year ago and is going to be pretty supply-friendly for the third and fourth quarters of this year.”

Higher Temperatures

Feedlot operators buy year-old animals that weigh 500 pounds (227 kilograms) to 800 pounds, called feeders. The cattle are fattened on corn for about four to five months until they weigh about 1,200 pounds, when they are sold to meatpackers.

The average global temperature last month was the fifth highest ever for April, according to the National Oceanic and Atmospheric Administration. In the U.S., the average was 55 degrees Fahrenheit (12.8 degrees Celsius), which is the third highest for any April, the agency said.

Feedlots sold about 1.815 million animals to meatpackers last month, up 0.4 percent from a year earlier, the USDA said. Analysts expected 1.7 percent decline, on average.

Fattened-cattle futures for August delivery rose 1.6 percent to settle at $1.21925 a pound at 1 p.m. on the Chicago Mercantile Exchange. After the close of regular trading prices rose as high as $1.221, the highest since March 28. The price is up 0.4 percent in 2012. Feeder-cattle futures for August settlement climbed 0.5 percent to close at $1.607 a pound in Chicago after reaching $1.6125, the highest since March 5.

Bloomberg News

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