* January cattle placements down 2 percent
* Feb 1 cattle supply up 2 percent
* January marketings up 2 percent
By Theopolis Waters
CHICAGO, Feb 24 - The number of cattle that moved into
U.S. feedlots fell for a second straight month in January, a
government report showed on Friday, signaling a further
tightening of beef and cattle supplies due in part to a
The U.S. Department of Agriculture's cattle-on-feed report
said placements fell 2 percent last month from a year ago, after
dropping 6 percent in December, while supplies in feedlots were
up 2 percent, the smallest increase in more than a year.
The data should support live cattle futures at the Chicago
Mercantile Exchange next week, even though futures have been
trending higher for weeks as meat packers scrambled to buy cash
cattle for beef plants.
Retail beef prices through January have been setting record
highs for five successive months. Expectations are for prices to
continue higher this spring at a time as Americans gear up for
"We're on a heck of a roll. The (price) trend is up sharply
and I don't see anything in this report that's going to stop
this trend," said Ron Plain, a livestock economist with the
University of Missouri.
The strong demand for cattle by packers, who have been
buying despite negative margins of more than $30 per head of
cattle, was reflected in the report's marketing number -- which
was higher than expected at 102 percent of a year ago. Analysts,
on average, expected marketings to be flat with a year earlier.
"Packers pulled cattle out of feedlots aggressively. The
pool of animals outside (feedlots) are over a million head below
last year. So, one would expect those year-to-year increases in
the feelot inventory to decline," said Livestock Marketing
Information Center director Jim Robb.
Robb sees no let up in retail beef prices, expecting them
to set more records in the next two years. It will take a least
that long before ranchers can increase cattle supplies.
With spring on the horizon, several retailers are already
shopping for fresh beef for grilling as temperatures begin to
moderate across the country.
Rich Nelson, director of research for Allendale Inc, said he
was expecting the lower-than-expected placements to support
deferred live cattle futures, particularly the August and
"Longer-term, and it didn't show up in this report,
placements will be declining and I think that will take beef
supply off the market nearing the end of the year so there will
be less beef for consumers," he added.
Robb said the report's only surprise was the 9 percent
increase in placed cattle that weighed more than 800 pounds.
"It tells us that animals performed well because of the warm
weather and growing programs, either inside or outside,
feedyards," said Robb. "These high prices continued to attract
these animals into feedyards even though our total cattle
population was down significantly."
(Additional reporting by Sam Nelson, Meredith Davis, Mike
Hitzer; Editing by Bob Burgdorfer)