The August 1 Cattle on Feed report was a little more bearish than the trade estimates. The on-feed number was down 2.3 percent, the trade estimate was for a 3.6 percent decline. Placements on feed during July were up 12.5 percent, the trade estimate was for a 6.5 percent increase. Fed marketings during July were down 5.4 percent, the trade estimate was for a 4.8 percent decline.
At the close of the futures market on Tuesday all live cattle contracts were up a little from $0.15-0.65 per cwt. So was the report bearish?
The cattle placed on feed during July were lighter weight than a year earlier. Seventy percent of the increased placements weighed less than 700 pounds, and 46 percent of the increased placements weighed under 600 pounds.
The cattle inventory for July 1 in Canada showed the total number of cattle down 1.1 percent, cows and heifers that have calved down 1.3 percent, and heifers held for beef cow replacement down 3.3 percent.
The total number of cattle and calves on July 1 in the United States and Canada was down 1.6 percent, and the number of cows and heifers that have calved was down 1.8 percent.
The odds are high that the cattle inventory will continue to decline at a slow rate for the last half of 2009 in North America.
Demand for beef at the consumer level for January-July was down 1.5 percent from a year earlier. Pork demand at the consumer level was up 4.0 percent for January-July, broiler demand was down 3.5 percent and turkey demand was up 4.5 percent.
Live fed cattle demand for January-July was down 8.1 percent from 12 months earlier.
Compared to last week feeder cattle at Oklahoma City were steady to $1.00 per cwt lower. Steer and heifer calves were steady.
The prices by weight groups for medium- and large-frame Number One steers were: 450-500 pounds $111-115.50 per cwt, 500-600 pounds $105-113.25 per cwt, 600-700-pound calves $94-100 per cwt, 600-700-pound yearlings $100.50-108.25 per cwt, 700-800 pounds $99.25-103.75 and 800-1,000 pounds $88.25-99.25 per cwt.
Wholesale beef prices Friday morning showed Choice beef at $144.02 per cwt, up $1.77 per cwt from a week earlier. Select beef at $136.13 per cwt was up $0.90 per cwt from seven days earlier.
There is a quite good relationship between cow slaughter and change in herd size. Beef cow slaughter suggests the beef cow herd on January 1, 2010, will be 1-1.5 percent below a year earlier. Dairy cow slaughter indicates the dairy cow herd will be down between 1.5 and 2.0 percent. Both herds need additional reductions to get milk and beef prices in line with costs.
Fed cattle prices through Thursday showed the weighted average for the five-market area at $84.43 per cwt, up $2.35 per cwt from a week earlier. The weighted average negotiated carcass price for the five-market area was $131.67 per cwt, up $1.00 per cwt from seven days earlier.
Slaughter this week under Federal Inspection was estimated at 654 thousand head, down 3.3 percent from 12 months earlier.
Glenn Grimes & Ron Plain
University of Missouri