(Updates with analyst comment and closing prices starting in sixth paragraph.)
Sept. 20 (Bloomberg) -- U.S. feedlot owners added the fewest number of cattle to herds for the month of August since the government began its current method of tracking the data in 1996, reducing placements by 10.9 percent from a year earlier.
Placements into herds totaled 1.788 million head, down from 2.007 million in August 2012, the U.S. Department of Agriculture said today in Washington. Analysts expected an 8.3 percent drop to 1.84 million, according to 14 estimates compiled by Bloomberg.
The total feedlot herd on Sept. 1 was 9.876 million head, down 7.2 percent from 10.647 million a year earlier, the USDA said. Analysts in the Bloomberg survey expected a 6.5 percent drop to 9.958 million. Sales of cattle to slaughterhouses last month totaled 1.883 million head, the second-lowest level on record, compared with 1.955 million a year earlier, according to USDA. Analysts expected marketings of 1.867 million.
“Most of the country is in a lot better shape, and there aren’t forced sales that there were last year,” Tim Petry, a livestock-market economist for North Dakota State University in Fargo, said in a telephone interview before the report. “We’ve got a lot more of the country not in a drought.”
Feedlot operators typically buy 1-year-old cattle that weight 500 pounds (227 kilograms) to 800 pounds, called feeders, which are fattened on corn until they weigh about 1,300 pounds and are sold to meatpackers.
“This cattle-on-feed report was bullish with our lower placements and our higher marketing figure than was expected,” Lane Broadbent, a vice president at KIS Futures Inc. in Oklahoma City, said in a telephone interview after the report. “This is a continuation of our tight numbers.”
Cattle futures for December delivery rose less than 0.1 percent to close at $1.2975 a pound at 1 p.m. on the Chicago Mercantile Exchange. The contract may open 0.6 cent to 0.8 cent higher on Sept. 23, Broadbent said.
As of Jan. 1, the U.S. cattle herd was at the smallest level since 1952 after the worst drought since the 1930s spurred ranchers to send more animals to slaughter. About 6.9 percent of the contiguous U.S. is in “extreme” drought, compared with 21 percent a year earlier, U.S. Drought Monitor data show. The USDA rated 34 percent of pasture and rangeland in good or excellent condition in the week ended Sept. 15, compared with 19 percent a year earlier.
Feedlots lost about $52 a head on average in August, and the prospect of continued losses are a “serious concern,” according to Rich Nelson, chief strategist at Allendale Inc. in McHenry, Illinois.
--With assistance from Jeanna Smialek in Washington. Editors: Thomas Galatola, Steve Stroth