The number of cattle on feed in U.S. feedlots as of August 1, at 10 million head, dropped 6 percent below that of a year ago, marking the 12th straight month of year-to-year declines. The decline was considerably larger than many analysts expected.

Cattle inventories, placements continue downwardPlacements into feedlots during July, at 1.72 million head, dropped by 10 percent compared with July 2012. Several analysts had predicted an increase in placements prior to the report.

Feedyards marketed more cattle than they placed during July, with the total of 2 million head running 5 percent above that of a year ago.

On January 1of this year, there were 11.2 million head of cattle on feed in U.S. feedlots with 1,000-head capacity or greater, and numbers have declined steadily since then, to a level now 1.2 million head lower.

High feed prices, months of negative margins and an overall shortage of feeder cattle have contributed to the decline in placements and inventories this year. As for the current report and the low placements during July, weather probably has played a key role. Last summer, widespread drought pushed many lightweight calves off depleted pastures and into feedlots earlier than usual. This summer, rains returned to many areas and cow-calf producers can return to a more typical weaning and marketing schedule. Some ranches with abundant forage might even delay marketing longer than usual beyond weaning to capitalize on cost-effective forage gains.

During July this year, 61.4 percent of cattle placed into feedlots arrived weighing more than 700 pounds, while 38.6 percent weighed 699 pounds or less.

The rate of placements likely will pick up as we move into the fall months, and probably will exceed the year-ago-figures due to last year’s early placement pattern. Total inventories will remain historically low however, suggesting a bullish outlook for cattle and beef prices.

Read the full Cattle on Feed report from USDA.