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Feedlots Buy 22% More Cattle as Drought Scorches Pastureland

U.S. feedlots increased purchases of young cattle by 22 percent in July, as a lingering drought in the southern U.S. forced ranchers to move animals off pastures.

Feedlots bought 2.153 million head of cattle last month, up from 1.758 million in July 2010, the U.S. Department of Agriculture said today in a report. The purchases were the most for July since at least 1996, the USDA said. Thirteen analysts surveyed by Bloomberg News projected a 17 percent increase, on average. The feedlot herd was 10.626 million as of Aug. 1, up 7.6 percent from a year earlier. Analysts expected a 7.1 percent gain.

The drought in Texas, the biggest cattle-producing state, has spurred a record $5.2 billion in farm losses, Texas AgriLife Extension Service, a unit of Texas A&M University, said this week. More than 49 percent of the land area in a six-state region in the South is experiencing “exceptional” drought, according to the U.S. Drought Monitor.

“Cattle placements during July were well above a year ago due to the ongoing drought on the southern Plains, which is forcing cattle off pastures into feedlots,” Troy Vetterkind, the owner of Vetterkind Cattle Brokerage in Chicago, said in an e-mail before the report. “This also increased the total on-feed population slightly.”

Feedlot operators buy year-old animals that weigh 500 pounds (227 kilograms) to 800 pounds, called feeders. The cattle are fattened on corn for about four to five months until they weigh about 1,200 pounds, when they are sold to meatpackers.

Feedlots sold about 1.908 million animals to meatpackers last month, up 0.4 percent from a year earlier and the second-lowest since at least 1996, the USDA said. Analysts expected a 3.4 percent decrease, on average.

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