United States-Feed Lots and the economy.

UNITED STATES CATTLE NUMBERS IN FEED LOTS.

USDA on Friday reported cattle and calves on feed for slaughter in U.S. feedlots with capacity of 1,000 or more head totaled 11.3 million head on Feb. 1, 2009, down 5.6 percent from a year ago, basically in line with market analysts’ expectations.

Placements in feedlots during January totaled 1.86 million, 4 percent above 2008. The average analyst forecast was for a 3.1 percent increase, which means more cattle will be marketed over the next three to five months than had been generally expected. However, a Dow Jones survey showed analysts’ predictions varied widely, with some expecting as much as an 8 percent increase, so market reaction to the number was muted.

Marketings of fed cattle during January totaled 1.74 million, 6 percent below 2008 and the lowest fed cattle marketings for the month of January since the series began in 1996. Market analysts, however, were expecting an even larger drop of about 7.4 percent.

It’s the economy

Analysts noted that livestock futures markets continue to react more to macro-economic factors, oil prices and stock market movements than fundamental cattle supply data.

The CME Group’s Daily Livestock Report said the markets continue to closely follow the turmoil in financial markets and the broader economy, seeking to gauge potential impact on consumer demand and beef sales going forward.

Oklahoma State University Extension Marketing Specialist Derrell Peel agreed. "While fed cattle supplies do not seem to be at burdensome levels, clearly current production is more than adequate for the current level of demand," he said in an analysis of the USDA report.

"Since about mid-January the impact of the recession has been increasingly apparent with almost daily indications of demand meltdown, and, unfortunately, no end in sight at the moment." he added.