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US - USDA will issue on Friday, June 22, the results of its monthly survey of feedlots that as of June 1 had more than 1000 head of cattle on feed, write Steve Meyer and Len Steiner.

Analysts polled ahead of the report expect a sharp increase in the number of cattle placed on feed during May. The range of estimates in the pre-report survey appears quite large but of the 11 analysts contacted by Dow Jones, 9 of them said they expect placements to increase by double digits and only one said that placements will be lower than a year ago. We agree that May cattle placements will likely show a notable increase form a year ago. But it is important to put the numbers in the context of what happened in the prior two months.

March cattle placements were down 6.4 per cent or 122,000 head from the previous year while April placements declined 264,000 or 14.8 per cent compared to 2011 levels. Feeder cattle supplies may be lower than a year ago but the March and April small placements also point to the fact that producers were inclined to leave cattle on wheat grazeout programs. High cattle prices likely offset the crop losses, especially with weak wheat value. Eventually those cattle will have to come off, implying that May placements include cattle that in a normal year probably would have come to market in March and April. One item to keep an eye on when the report comes out is the composition of cattle placements.

Longer wheat grazing should bring to market heavier cattle. Market reports indicate that higher placements may have been the result of expanding dry conditions and poor pastures. While that may have been an issue in some areas, it probably was not the determining factor for May placements. Pasture conditions in May were near normal levels. In the Southern Plains they actually showed dramatic improvement from a year ago. It was not until late May and early June that pasture conditions started to deteriorate, something that will likely be captured in the next feedlot report.

Another driver for the year over year increase in feedlot placements is the steady growth in feeder cattle imports from both Mexico and Canada. If analysts are correct and we do see a quarter million head increase in feedlot placements (+14.2 per cent / 257,000 head), almost 1 in 4 of those additional placements will be from south or north of the border. Feeder cattle imports from Mexico have been very strong in the past 12 months as drought in the Northern States has pushed more feeders into US feedlots, especially in Texas.

For the period 29 April - 2 June, feeder cattle imports from Mexico were 199,707 head, 49,603 head or 33 per cent larger than the same period a year ago. Feeder cattle imports from Canada during the same period were 22,239 head, 14,299 head or 180 per cent larger than a year ago. Feeder imports were high in March and April as well, which implies that US domestic feeder placements were even smaller than what the survey data suggests.

The jump in placements will likely be short lived. Worsening pasture conditions are a concern but it is unlikely we will get anywhere close to the disaster we experienced last year. The ever shrinking calf crop and the incentive to expand where possible will likely limit the number of female calves coming to market. But good pastures remain key, and for that Mother Nature has the final say.