Cattle Outlook

Ron Plain and Scott Brown
Ag Economics, MU
July 22, 2016

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USDA's July cattle on feed report said June placements were 103.0% of a year ago and June marketings were 109.4%. The number of cattle on feed on July 1 totaled 10.356 million head, up 1.2% compared to 12 months earlier. Placements and the number on feed were below most trade expectations. Steers on feed were down 0.6% compared to July 1, 2015 while heifers on feed were up 4.8% year-over-year.

Calculations by the Livestock Marketing Information Center indicate average unhedged June closeouts for cattle feeders were in the red by nearly $86 per head. This was better than the $139 per head loss a year ago.

Commercial cattle slaughter totaled 2.7057 million head in June. That was up 9.7% compared to a year earlier. June steer slaughter was up 11.9%, heifer slaughter was up 4.9% and cow slaughter up 9.8% compared to June 2015.

USDA weekly crop progress report said that 14% of U.S. pastures were in poor or very poor condition as of July 17. That is up 1 point from the week before and 3 points higher than a year ago. Corn futures were lower for the fifth week in a row.

Fed cattle prices are lower for the third consecutive week. Sales volume was heavy this week. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $114.65/cwt, down $2.35 from last week's average and down $30.75 from a year ago. The 5-area dressed steer price averaged $184.83/cwt, down $2.59 from the week before and down $47.20 from a year ago.

This morning the choice boxed beef cutout value was $200.36/cwt, down $5.01 from the previous Friday and down $9.50 from two weeks ago. The select carcass cutout this morning was $189.96/cwt, down $3.28 from last week and down $7.01 compared to two weeks earlier. The choice-select spread, $10.40/cwt this morning, remains large.

This week's cattle slaughter totaled 595,000 head, down 0.5% from last week, but up 11.2% from a year ago. The average steer dressed weight for the week ending on July 9 was 875 pounds, up 7 pounds from the week before, down 10 pounds from a year ago, and below the year-ago level for the tenth consecutive week.

Feeder cattle prices at Oklahoma City were generally steady to $1 higher this week. Prices for medium and large frame #1 steers by weight group were: 450-500# $157.50-$160, 500-550# $145-$159.50, 550-600# $146-$153, 600-650# $135-$158, 650-700# $137.25-$155.75, 700-750# $141.50-$146.50, 750-800# $140-$145, 800-900# $130-$140.85 and 900-1000# $128.50-$135.50/cwt.

The August live cattle futures contract settled at $109.95/cwt today, down 97 cents for the week. October fed cattle settled at $108.07/cwt, down $1.78 from the previous Friday. August feeder cattle futures ended the week at $137.20/cwt, down $2.37 from a week earlier. October feeder cattle closed the week down $2.57 at $134.80/cwt.

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