US feedlot results hold no surprises in June

The figures released in last week’s US Department of Agriculture Cattle On Feed report were generally in line with what analysts and the market expected. The headline figure of 10.8 million cattle in feedlots over 1,000 head capacity at the start of June was 2% higher than one year previously, as forecast by analysts in a regular survey.

The number of cattle placed in feedlots during May was 1.88 million head, a 10% jump on May 2015, while cattle marketed out of feedlots during May reached 1.79 million head, 5% higher than last year – both also in line with expectations.

There are differences in opinion between US analysts as to which way the market for finished cattle will go through the remainder of 2016. Steiner Consulting Group suggests that the futures markets have factored in a likely increase in available supply of finished cattle and beef, which will keep prices down. The Cattle Marketing Information Service, however, indicates that current futures values are cheaper than fundamentals would suggest, and spot prices will move up through the remainder of the US summer and into autumn.

Beef supplies are expected to be adequate for end-user requirements through summer, and with beef remaining popular with consumers, there should be an incentive for retailers to continue featuring beef through summer. This type of activity would help product move through the supply chain, but the upward impact on beef prices would likely be limited.