Cattle Outlook
Ron Plain and Scott Brown
University of Missouri
Wholesale beef prices set new records this week. This morning, the boxed beef cutout value for choice carcasses was $246.07/cwt, up $5.26 from the previous Friday, up $48.55 from a year ago, and up $2.06 from the highest day prior to this week. The select cutout was $237.51/cwt on today's morning report, up $4.23 from last week and up $50.25 from a year earlier.
Fed cattle prices were higher this week on light sales volume. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $151.35/cwt, up $2.31 from last week's average, up $30.53 from a year ago, and within a dollar of the all-time record. The 5 area average dressed price for steers was $242.36/cwt, up $5.42 for the week and up $50.36 from the same week last year.
U.S. GDP declined at a 2.9% annual rate during the first quarter of 2014. Only two quarters in the last 20 years had bigger declines. If the economic decline continues, look for a drop in meat demand.
USDA's June Cattle on Feed report said during May there was a 10.1% increase in placements of cattle weighing less than 600 pounds, but an 11% decrease in placements of cattle weighing 600 pounds or more. Because the total cattle herd is the smallest in decades, there is surplus feedlot capacity. Placing light calves is one way to utilize more feedlot space since the calves will be on feed longer.
There were 379 million pounds of beef in cold storage at the end of May. That is down 5.8% from the month before, down 21.5% compared to a year earlier, and the lowest stocks of frozen beef at the end of any month since June 2010.
This week's cattle slaughter totaled 615,000 head, up 0.3% from the previous week, but down 6.0% from the corresponding week last year. The average dressed weight for steers slaughtered the week ending on June 14 was 852 pounds, up 2 pounds from the week before, but 1 pound lighter than the same week last year.
Feeder cattle prices at this week's Oklahoma City auction were steady to $2 higher than the week before. This week's prices for medium and large frame #1 steers by weight were: 400-450# $264-$283, 450-500# $251-$265, 500-550# $227.50-$253, 550-600# $230-$249, 600-650# $218-$247, 650-700# $204-$233, 700-750# $200-$218, 750-800# $205-$210, 800-900# $196.50-$207, and 900-1000# $175-$178/cwt.
The June live cattle futures contract closed at $152.25/cwt today, up $4.70 from last week's close. August fed cattle settled at $151.12/cwt, up $4.80 for the week. The October contract ended the week at $154.35/cwt. December closed at $154.62/cwt.
The August feeder cattle contract ended the week at $214.32/cwt, up $7.45 for the week. The September feeder cattle contract settled at $215.90, up $7.73 from the previous Friday. October feeders ended the week at $216.27/cwt.