UPDATE 1-US cattle placements unexpectedly rise in March after Feb delays

Fri Apr 19, 2013 6:00pm EDT

* April 1 feedlot cattle supply falls 5 pct year-over-year
    * March placements up 6 pct year-over-year, above forecasts
    * Marketings drop 8 pct from yr ago, below estimate
    * Report viewed bearish for cattle futures on Monday

 (Adds background and analysts' comments)
    By Theopolis Waters
    CHICAGO, April 19 (Reuters) - The number of cattle placed in
U.S. feedlots last month rose unexpectedly, a government report
showed on Friday, in what looked like a catch-up movement from
ranches after harsh winter weather in February delayed their
arrival for fattening.
    The U.S. Department of Agriculture showed the number of
cattle put into feedyards in March rose 6 percent from a year
earlier to 1.899 million head. The average analyst estimate was
for a 1.5 percent decline. Placements were the most for the
month of March since 2011 when they were 1.914 million.
    "All placement weight categories were above year ago and
we're finding it very difficult to explain where the placements
came from," said Livestock Marketing Information Center director
Jim Robb.
    Analysts said wintry weather in February created a backlog
of young cattle that landed in feeding pens in March.
    Because corn prices did not come down until the waning days
of March, analysts discounted speculation that cheaper feed
caused feedyards to bring in more younger cattle then.
    The hardest placement number in the report to explain is the
increase in Texas because Mexican feeder cattle imports slowed
after ranchers there suffered from prolonged drought, said Robb.
    U.S. Commodities analyst Don Roose said: "Guys (ranchers)
were moving cattle to the feedlots at a loss. Prices for feeder
cattle were under a lot of pressure, and if they (ranchers)
turned them over they could replace them with cheaper feeders."
    Increased placements suggest a few more cattle will come to
market in late summer, early fall. Still, record-high beef
prices are expected the rest of this year with cattle supplies
seen tight through 2015, analysts said.
    The average U.S. retail beef price during March hit an
all-time high of $5.30 per lb, surpassing the $5.15 November
record, and was up from $5.05 a year ago, according to the
USDA's Economic Research Service.
    USDA put supply of cattle in feedlots on April 1 at 10.909
million head, or 95 percent of the year-ago total. Analysts
polled by Reuters, on average, expected 94 percent. 
    The government said the number of cattle sold to packers, or
marketings, in March was down 8 percent from a year earlier, to
1.771 million head versus forecasts for a 6.4 percent decrease.
March 2013 marketings were the smallest for the month since
1.764 million in 1997.
    The marketing number was lower than the pre-report estimates
but not out of line given one fewer day to slaughter cattle,
said Robb.
    "The pre-report estimates were implying that some of these
larger feedlots marketed more aggressively than they did," he
said. 
    Analysts said the larger-than-expected placements and lower
marketing results could cause live cattle contracts at the
Chicago Mercantile Exchange to open as much as 0.750 cents per
lb lower on Monday morning.
    They said trying to predict how much traders will respond to
Friday's report is difficult given the already bearish tone in
the futures market.
    "Compared to people's thoughts ahead of time its 
(placements) are going to be taken as a negative, probably for
the August, and to a larger extent, October futures," said Doane
Advisory Services analyst Marty Foreman.

 (Additional reporting by Michael Hirtzer; Editing by Chizu
Nomiyama)
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