United States-Drought boost numbers of cattle in Feed Lots.

U.S. feedlots probably bought more young cattle in February than a year earlier after drought in the southern Great Plains limited grazing on pastures, analysts said.

Purchases rose 0.7 percent to 1.735 million head from 1.723 million in February 2008, according to the average estimate of nine analysts surveyed by Bloomberg News. The U.S. Department of Agriculture is scheduled to release its monthly report on the feedlot herd, including estimated purchases of young cattle, at 3 p.m. tomorrow in Washington.

Some parts of Texas, the largest U.S. cattle-producing state, received as little as 12 percent of normal rainfall in the past three months, the USDA said March 16. Pasture conditions were ranked "mostly very poor to poor statewide," the government said.

"We’re getting short on grass," said Ron Plain, an economist at the University of Missouri in Columbia. "In the southern Plains, they can normally graze through the winter, but the severe drought has caused a shortage of grass, and cattle have gone into feedlots just to find something to eat."

Feeder-cattle futures for May delivery declined 0.275 cent, or 0.3 percent, to 94.05 cents a pound yesterday on the Chicago Mercantile Exchange. Slaughter-ready cattle futures for June delivery fell 0.525 cent, or 0.6 percent, to 81.4 cents a pound.

Feedlots buy year-old animals that weigh 500 pounds (227 kilograms) to 800 pounds and fatten them on corn until they weigh about 1,200 pounds and are sold to slaughterhouses.

Feedlot Losses

Cattle purchases increased even after high feed costs and waning beef demand led to 21 straight months of losses for feedlot operators, Plain said. Feedlots without risk management plans lost $150 per steer and heifer sold in February, compared with losses of $230 a head in January. Losses in February 2008 also totaled $150 a head, Plain said.

"Feeding margins over the last 18 months or so have just been a disaster," said Bob Wilson, an analyst at HedgersEdge.com LLC in Greenwood Village Colorado. "Beef demand has continued not to support higher prices."

The price of wholesale choice beef fell 1.27 cents, or 0.9 percent, to $1.3434 a pound yesterday, USDA data show. On Feb. 27, choice beef slumped to $1.3221 a pound, the lowest since August 2005. The price is down 5.7 percent in the past year.

Total Herd

The overall U.S. feeder-cattle herd probably totaled 11.287 million head on March 1, down 4.8 percent from 11.853 million a year earlier, according to the average analyst estimate.

In a gauge of supplies of slaughter-ready steers and heifers, feedlot operators probably sold 1.677 million head of cattle to meatpackers in February, down 5.6 percent from a year earlier, the analysts said.

So-called marketings were lower partly because February had one less weekday this year than last year, giving meatpackers less time to process cattle, Wilson said. Last year was a leap year.

U.S. meatpackers processed 6.372 million cattle this year through March 14, or 5.5 percent less than in the same period in 2008, according to USDA estimates.