Rising feedlot placements “casts doubts” that cattle prices can remain high.
The costliest drought in Texas history probably forced ranchers to sell the most cattle to feedlots since December, signaling a surge in U.S. meat supply that may cut costs for processors, including Tyson Foods Inc. (TSN).
Feedlot operators in the U.S. bought 2.051 million head of cattle last month, up 17% from a year earlier, based on the average of 13 estimates in a Bloomberg survey of analysts. Texas is the biggest cattle-producing state.
The Texas drought, the worst in more than a century, has spurred a record $5.2 billion in farm losses, according to a unit of Texas A&M University. Costs to livestock producers may total $2.06 billion partly as ranchers are forced to sell cattle because parched pastures have boosted feed costs. Rising supply may mean cheaper beef for retailers and restaurants such as Chipotle Mexican Grill Inc. (CMG), which increased menu prices to combat food inflation.