Cattle Outlook

Ron Plain and Scott Brown
Ag Economics, MU
October 2, 2015

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Fed cattle prices were sharply lower this week on good volume. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $118.61/cwt, down $9.86 from last week’s average and down $41.37 from a year ago. The 5 area average dressed price this week for steers was $187.51/cwt, down $14.96 for the week and down $64.49 compared to the same week last year.

Slaughter steer prices have been lower each week since the start of August. This week’s 5 area average live price for slaughter steers is down $23.14 from four weeks ago and down $32.52 from 8 weeks ago.

The price decline is due to a quick, unexpected turn-around in beef production. This is the third consecutive week that beef production has been above the year ago level. This follows nearly 100 weeks when daily beef production was consistently below the year-ago level.

Heavy weights are a big part of the problem. The average steer dressed weight for the week ending on September 19 was 923 pounds, up 4 pounds from the week before, up 36 pounds compared to the same week last year, above the year-ago level for the 66th consecutive week, and record high for the fourth consecutive week.

Cattle slaughter this week totaled 571,000 head, down 0.5% from the week before and down 1.0% from the same week last year.

The Bureau of Labor Statistics says the U.S. economy added 58,800 fewer jobs during July and August than earlier reported and added 61,000 fewer jobs than expected in September. They also said that the average work week declined by 0.1 hour and the average wage declined by a penny. None of this is positive for meat demand.

This morning the choice boxed beef cutout value was $206.75/cwt, down $6.70 from the previous Friday. The select carcass cutout was $203.38/cwt this morning down $7.30 from last week.

Feeder cattle prices at Oklahoma City were $3 to $8 lower this week. Prices for medium and large frame #1 steers by weight group were: 400-450# $219-$243, 450-500# $217-$231, 500-550# $204-$220, 550-600# $181-$210, 600-650# $185-$207.50, 650-700# $167-$202, 700-750# $174-$197.50, 750-800# $167-$194, 800-900# $167.50-$188.50 and 900-1000#, $170-$176.85/cwt.

Cattle futures also were lower again this week. The October live cattle futures contract settled at $123.07/cwt today, down an astounding $10.63 for the week. December fed cattle settled at $131.37/cwt, down $5.63 from the previous week. February fed cattle settled at $133.72/cwt, off $3.78 for the week.

October feeder cattle ended the week at $179.50/cwt, down $5.10 from a week earlier. November lost $7.08 this week and closed at $174.52/cwt.

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