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Cattle inventory continues to decline

In this weekly Commodities Watch column, John T. Barone, president and commodities analyst for Market Vision Inc., offers a snapshot of the state of commodities for restaurants.

Friday’s USDA cattle report showed feedlot inventories at 10.03 million head, a decrease of 5.9 percent from a year ago. New feedlot placements in July were 1.72 million head, a drop of 10.4 percent from last year.

Feedlot inventory has declined for 12 straight months. Multiple years of drought have denied ranchers grazing land, while high feed prices have cut margins for feedlot operators. As a result, both on-feed and off-feed cattle numbers are depleted.

On Aug. 7, Tyson Foods told suppliers that due to unexplained animal ambulatory problems, it would no longer buy cattle that are fed the weight-gain drug Zilmax. Subsequently, Merck Animal Health suspended sales of the drug pending further study. While lack of Zilmax threatens carcass weight gains, expected increased usage of ADM’s Optaflexx and cheaper feed cost for feedlot operators should help mitigate declines in weight gain.

Contact John T. Barone at [email protected].

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