Feedlots are “trying to place anything they can,” said Jim Clarkson, a broker with A&A Trading near the CME live cattle futures pit. “There’s a perception that the number of feeders is going to run out.”
During November, live cattle averaged nearly $1.22 a pound, up 22 percent from the same month in 2010, based on CME futures. Feeder cattle averaged about $1.44 a pound, up 26 percent from a year earlier, and touched a record $1.4985 on Nov. 18.
A gauge of beef supplies four to eight months in the future, feedlot placements are among the most widely-followed measures in the cattle industry. Cattle placed in feedlots during November will be sent to slaughter beginning around April.
In another closely followed number in the monthly USDA report, the total number of cattle on feed as of Dec. 1 is expected to be up 3.7 percent from 11.61 million head a year earlier, based on the average of the five analysts’ estimates. On-feed inventories were above year-earlier levels in every month since June 2010.
Despite higher feedlot numbers, the total cattle herd fell to a record low earlier this year as drought withered Plains pastures. Amid an outlook for further export market strength, beef supplies are expected to stay tight, forcing consumers to pay even more for steaks and burgers.
In 2012, U.S. beef production is expected to drop 4.9 percent from 2011 levels, to 25.1 billion pounds, the lowest since 2005, according to a separate USDA report earlier this month. Retail beef and veal prices are expected to increase 8 percent to 9 percent this year and rise another 4.5 percent to 5.5 percent in 2012, according to a USDA forecast.