UPDATE 1-US cattle supply slide to 10-year low in November
* Dec 1 feedlot supply fall 6 pct, smallest since 2002
* Nov placements drop 6 pct yr-over-yr vs 8.8 pct forecasts
* Marketings down 1 pct from yr ago, below avg estimate
* Report seen neutral-mildly bearish for cattle futures on Monday (Adds analysts comments)
By Theopolis Waters
CHICAGO Dec 21 (Reuters) - The number of cattle in U.S. feedlots for fattening fell 6 percent in November to the smallest in 10 years for the month, a government report said on Friday.
The U.S. Department of Agriculture put supply of cattle in feedlots on Dec. 1 at 11.328 million head, or 94 percent of the year-ago total. Analysts polled by Reuters, on average, expected 93.4 percent.
The 6 percent fall from a year earlier resulted in the smallest on-feed number for the month since December 2002's 10.946.
USDA showed the number of cattle arriving at feedlots last month also down 6 percent from November 2011 to 1.923 million head, falling for a sixth straight month. The average analyst estimate was for a 8.8 percent decline.
And, USDA said the number of cattle sold to packers, or marketings, in November was d own 1.0 percent from a year earlier, to 1.761 million head versus expectations of a 0.2 percent increase.
Analysts viewed Friday's cattle report as neutral to mildly bearish for Chicago Mercantile Exchange live cattle on Monday.
But, market direction will also depend on other factors such as investor sentiment following the stock market's sharp break on Friday following failed budget talks in Washington.
DROUGHT STILL AN ISSUE
In the cattle sector, feed yards last month continued to operate deeply in the red while buying younger cattle from ranchers and selling them to packing plants.
Their bottom lines took a huge hit after historic drought last summer dried pastures, pushing feed grain costs to all-time highs and doubled the cost for hay.
The pool of younger cattle had also dwindled after last year's drought in the U.S. southwest shrunk the herd to its smallest in 60 years -- resulting in fewer cattle now.
Prolonged dryness in parts of the Plains limited wheat grazing pastures for cattle, landing a few more younger animals in feedlots in November than some had anticipated.
Allendale Inc. chief strategist Rich Nelson, is expecting Chicago Mercantile Exchange June and August contracts to open down about 0.200 cents per lb based on the November placement outcome.
"Looking at average estimates, placements were larger than anticipated given the potential winter wheat pasture problem. Perhaps a few extra cattle were taken from those pastures and moved to the feedlot," he said.
But, he pointed out that the placement data continues to confirm the trend of tightening cattle supplies in 2013, which is supportive overall for the cattle market.
U.S. Commodities president Don Roose focused on the placement result's longer-term bullish implications some of which, he said, has already been factored into the futures market.
"There's no doubt that the fundamentals are in place for long-term support, but we are working out of a short-term supply that still remains adequate," said Roose.
Placements being up more than anticipated may be tied to feed costs that have moderated from those summer highs, offering some measure of optimism to those who feed cattle, he said.
Jim Robb, director of the Livestock Marketing Information Center, viewed the 94 percent of a year ago feedlot supply figure as neutral because it was within expectations.
However, at first glance some may regard the November marketing figure at 1 percent below last year ago as somewhat bearish.
But, Robb said the government may have overstated the number of cattle sold to packers last year given the drought in the southwestern United States at that time and the downsizing of feedlots with 1,000-head and less. (Additional reporting by Michael Hirtzer in Chicago; Editing by David Gregorio and M.D. Golan)
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