Falling Cattle Sales Signal Shrinking Beef Supply, Record Prices

U.S. feedlots probably reduced cattle purchases in April by the most in three years, signaling tighter beef supplies and a rebound in prices, and raising costs for consumers and restaurants from Texas Roadhouse Inc. to Wendy’s Co.

Purchases probably fell 12 percent to 1.563 million head from a year earlier, according to a Bloomberg News survey of 13 analysts. That would be the biggest year-over-year decline since May 2009. The U.S. Department of Agriculture will report on feedlot supplies at 3 p.m. in Washington.

Fewer animals were available for sale after a drought destroyed pastures, causing a record $7.62 billion in farm losses in Texas, the biggest cattle-producing state, prompting ranchers to cull herds. U.S. beef output will fall to 11.5 million metric tons (25.3 billion pounds) this year, the lowest since 2005, the government forecasts. For the rest of the year, feedlot purchases, or placements, will slide and inventories will shrink, pressuring beef prices higher, said Derrell Peel, an agricultural economist at Oklahoma State University.

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