Ron Plain: Cattle Outlook
Choice beef prices at retail averaged $4.809 per pound in June, down 6.3 cents from May, but up 31.8 cents from June 2010. The 5 area market price for steers averaged $107.20/cwt in June, down $3.10 from May, but $9.20 above June 2010.
The retail beef demand index is up slightly thus far in 2011. We have reestablished the monthly meat demand calculations website started by Glenn Grimes. It is available at: http://agebb.missouri.edu/mkt/demand/index.htm The primary driver of the higher beef prices this year has been export demand. Through May export demand for U.S. beef is up 34%.
Hot, dry weather is causing pasture conditions to deteriorate, especially in the southern plains. On July 17, 32% of U.S. pastures were rated poor or very poor. On the same date last year, only 11% of pastures were rated in poor or very poor condition. Texas, the number one cattle state, has the worst of it. An amazing 94% of Texas pastures are in poor or very poor condition. 78% of Oklahoma pastures are rated poor or very poor. Adverse pastures conditions are driving up feed costs and pushing cattle into feedlots sooner.
USDA's July cattle on feed report said the number of cattle on feed on July 1 was up 3.8% compared to a year earlier. June placements were up 4.1% and June marketings were up 5.3% compared to a year earlier. The report is a bit bearish as placements are 10.7 percentage points above the re-release trade forecasts.
Boxed beef prices ended the week higher. Friday morning the choice boxed beef carcass cutout value was $175.70/cwt, down $5.45 from last week. The select carcass cutout was down $5.51 from the previous Friday to $170.30 per hundred pounds of carcass weight.
The 5-area daily weighted average price for slaughter steers sold through Thursday of this week on a live weight basis was $108.50/cwt, down $2.37 from last week. Steers sold on a dressed weight basis this week averaged $174.31/cwt, $4.71 lower than the week before.
This week's cattle slaughter totaled 651,000 head, down 2.4% from the week before and down 2.3% compared to the same week last year. The average steer dressed weight for the week ending July 9 was 845 pounds, up 7 pounds from the week before and 11 pounds heavier than for the same week in 2010.
Cash bids for feeder cattle around the country this week generally were from steady to $12/cwt lower than last week. Oklahoma City prices this week were $2 to $10 lower with price ranges for medium and large frame #1 steers: 400-450# $136-$141.50, 450-500# $139-$150, 500-550# $134-$147.50, 550-600# $136-$141.50, 600-650# $134.50-$138.50, 650-700# $134.50-$144.25, 700-750# $118-$144, 750-800# $132-$138, 800-900# $125-$137.60 and 900-1000# $115-$125/cwt.
The August fed cattle futures contract ended the week at $110.55/cwt, down 5 cents from last week's close. October ended the week at $115.40/cwt, the December contract closed at $119.15.
Source: University of Missouri