By Christine Stebbins
CHICAGO, Oct 17 (Reuters) - U.S. agribusiness conglomerateCargill Inc said it will close its Lockney, Texas,feedlot next summer due to shrinking supplies of cattle and highfeed costs.
The pending closure comes months after the company shut oneof its Texas beef packing plants also because of fewer cattle.
"Due to the drought-depleted beef cattle supply in theregion, and after a careful examination of the region's overallbeef production situation, Cargill determined that it could nolonger justify the operation of its Lockney, Texas, feedlot,"Cargill spokesman Mike Martin said on Thursday.
The feedlot will be closed "at a date to be determined insummer 2014," he said.
The feedlot, with a one-time capacity of 62,000 head, or120,000 cattle annually, is one of three Cargill feedlots inTexas. The other two are in Dalhart and Bovina.
The closure marks the second Cargill property in Texas toshut down recently. Cargill, the third largest U.S. meatpacker,idled its Plainview beef processing plant in February for thesame reasons. The Lockney feedlot primarily supplied cattle tothe shuttered Plainview plant located 15 miles away.
"Those cattle had to be hauled to the other Cargill plantsthat were further away. The closure of the kill plant atPlainview was a major contributing factor to increased freightcost to ship cattle," said John Ginzel, an analyst with The LinnGroup based in Chicago.
Cargill said it will continue to supply its Friona, Texas,beef processing facility with cattle from its two remainingTexas Panhandle feedlots as well as from other feedlots in theregion.
"No additional Cargill beef facility closures are planned,"Martin said.
The U.S. cattle supply is the smallest in 61 years aslivestock producers in the southern Plains have faced years ofdrought. Record-high feed prices over the past year contributedto the challenges of feeding cattle.
Most of Cargill's business units were profitable in 2012 but earnings at its animal protein business were down, pressuredby poor profit margins in its beef sector, the company said.
Ginzel said the loss of the Cargill's Lockney feedlot likelywill not affect how packers in the region compete for cattle.
Cargill has 45 employees at the feedlot and they will beoffered positions at other company facilities in the region.