PREVIEW-Healthy pastures likely curbed Dec US feedlot placements

Theopolis Waters
Wednesday, 22 Jan 2014 | 5:57 PM ET

* WHAT: USDA Cattle on Feed Report

* WHEN: Friday at 2 p.m. CST (2000 GMT

* Jan. 1 feedlot cattle supply seen down 6.2 percent

* December placements seen down 2.3 percent year-on-year

* December marketings seen up 2.0 percent year-on-year

CHICAGO, Jan 22 (Reuters) - Placements of cattle in U.S. feedlots in December likely dropped by 2.3 percent from a year earlier due to sufficient pastures for grazing that kept animals out of feedyards longer for fattening, according to most analysts polled by Reuters. A few contrarians believe that last month's placements grew year-over-year as less-costly feed prompted feedlots to bring in younger cattle despite their prohibitively high costs. The U.S. Department of Agriculture will issue its monthly cattle-on-feed report on Friday at 2 p.m. CST (2000 GMT). The data will feature the Jan. 1 feedlot cattle supply along with placements and marketings for December. Analysts, on average, expect the report to show December placements at 97.7 percent of the year-ago level, or 1.626 million head. If accurate, it would be the smallest placement figure for the month since 1.526 million in 2009. Cattle that arrived in feedlots last month should be available for processing around May through September of 2014, depending on the weight of the animal, analysts and economists said. "We've got better grazing conditions and lower hay prices," said University of Missouri livestock economist Ron Plain. Adding weight to cattle cost less if they are on pastures and given hay rather than comparatively expensive corn in feedlots, he said. Don Roose, analyst with U.S. Commodities, said improved grass conditions in the U.S. Plains kept cattle on farms. The exception is California where the deepening drought is quickly pushing cattle into feeding pens ahead of schedule, he added.

PRICEY CALVES TRIM PROFITS Feedlots in recent months were faced with record-high costs for scarce lightweight calves that eroded their bottom lines. In October, feedlots profits briefly surfaced in the black for the first time in 29 months following last fall's record corn harvest. In December, Chicago Board of Trade corn futures averaged $4.20-5/8 per bushel, which was down from $4.22-7/8 in November. LMIC calculated feedlots in December averaged a loss of about $68 per head on cattle sold to meat companies, compared with a $26 per head loss the month before. "Feedlots tried to take advantage of reduced input costs with feed values at a 4 1/2-year low. But, it's difficult to pull cattle in if there is nothing out there," said Roose. Analysts, on average, expect the report on Friday to show the Jan. 1 feedlot cattle supply at 93.8 percent of the year-ago level, or 10.499 million head. That would be the lowest supply for that date since 1996's 10.346 million head. The shrinking pool of feeder cattle led to fewer animals available to be put on feed, Plain said. Friday's government report also is expected to show cattle marketings, or the number of animals sold to packers in December, at 102.0 percent of a year ago or 1.780 million head. If accurate, it would be the smallest for the month since 1.830 million in 2010. There was one more day to market cattle in December 2013 than a year ago for the same period, analysts said.

(Editing by Ken Wills)