November 17, 2017 / 10:42 PM / a year ago

U.S. Oct feedlot cattle placements jump implies low prices in 2018

    * October placements up 10.2 pct vs year ago
    * Nov. 1 feedlot cattle at 106.2 pct of year ago
    * October marketing up 5.6 pct vs last year
    * Report bearish for CME live cattle futures

    By Theopolis Waters
    CHICAGO, Nov 17 (Reuters) - Ranchers in October put 10.2
percent more cattle into U.S. feedlots than the same period last
year, the U.S. Department of Agriculture reported on Friday.
    The result surpassed analysts' average prediction. It also
was the highest for the month in six years, suggesting weaker
cattle prices beginning this spring while faced with uncertain
beef demand, analysts said.
    "Cattle numbers are going to be large, particularly during
the second half of the year. But it's just a matter of are we
going to sell the meat," said U.S. Commodities President Don
    Less-costly feed, and increased supplies as heavier calves
transition from summer grazing pastures to fall programs,
ultimately contributed to the seasonal bump in last month's
placements, analysts said.
    Packers paid feedlots more for their cattle, which allowed
them to buy calves to fatten. And a growing number of heifers
entered feedyards - a sign that some ranchers may be reducing
their herds.
    Analysts said that given Friday's bearish placement result,
Chicago Mercantile Exchange live cattle futures        on Monday
might open 0.500 to 1.000 cent per pound lower.
    "Live cattle contracts look pretty lofty relative to the
supplies that we think are coming," said Texas A&M University
economist David Anderson.
    USDA's report showed October placements at 2.393 million
head, up 10.2 percent from 2.171 million a year earlier and
above the average forecast of 2.337 million. 
    It was the largest October placement figure for the month
since 2.407 million in 2011, according to Anderson. 
    The government put the feedlot cattle supply as of Nov. 1 at
11.332 million head, up 6.2 percent from 10.665 million a year
ago. Analysts, on average, forecast a 5.7 percent rise.
    USDA said the number of cattle sold to packers, or
marketings, were up 5.6 percent in October from a year ago to
1.801 million head.
    Analysts had projected a gain of 5.4 percent from 1.705
million last year.
    "We just have a lot of supply," said Anderson. That, coupled
with profitable opportunities for some feedlots, imply the
industry is moving cattle quickly, he said.
    Anderson said that heifers either held back from last year,
or ranchers not deciding to add them to the herd for whatever
reason, boosted October placements. 
    "Which means we're rapidly slowing the rate of herd
expansion," Anderson said.

 (Reporting by Theopolis Waters in Chicago; editing by Grant
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