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Market awaits USDA cattle placement data

Agriculture.com Staff 07/19/2006 @ 8:35am

While this week's USDA cattle on feed report is expected to show large numbers, analysts differ on whether a record will be set.

The larger number of cattle on feed is seen mainly due to deteriorating pastures and rising live cattle prices during June, one analyst said.

On Friday, the USDA will release its estimate of cattle on feed as of July 1 at 2:00pm CST.

The July 1 record for cattle on feed is 11.011 million set in 2001, according to USDA statistics.

Market analysts will watch the June placements figure. A large figure would certainly move the market in a negative direction, one analyst said.

In order for a record to be set, the number of cattle placed into feedlots in June would have to be at least 6% above a year ago.

While a survey conducted by the Dow Jones Newswire indicated a range of trade estimates between 7% below last year to 8% above, one analyst told Agriculture Online a record cattle population is unlikely.

Dan Vaught, AG Edwards livestock analyst, estimated a 2.0% increase in placements.

"I thought we topped year ago figures because the fed cattle market was strong during June, causing feedlot operators to buy yearlings fairly aggressively," Vaught said. "But, I think we'll fall short of a record of cattle on feed, similar to June 1."

With Vaught's 3% placement estimate, if realized, that would mean 10.725 million head of cattle on feed, above 10.394 million at this time a year ago, but below the USDA's June 1 estimate of 11.187 million.

Similarly, Allendale Incorporated, a market advisory service, estimated the supply of U.S. cattle on feed at 103% of last year's on-feed population.

Separately, the USDA Semi-Annual Cattle Inventory Report will give the market its first glance at the 2006 calf crop on Friday.

"I think we'll see moderate expansion," Vaught said. "In 2004, we started moving from industry contraction to an expansion mode. But, I don't see the market reacting negatively to these numbers. Keep in mind, the drought last fall into this spring has slowed expansion."

Meanwhile, USDA will release its Cold Storage report on Friday. Allendale's pork belly estimate implies a 17.1 million pound drawdown from last month. That is the largest drawdown since 1990. The five-year average decline for that month is 7.1 million pounds.

While this week's USDA cattle on feed report is expected to show large numbers, analysts differ on whether a record will be set.

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