Cattle Outlook

Ron Plain and Scott Brown
University of Missouri
August 21, 2015

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This month's cattle on feed report noted 2.6% more cattle in 1,000+ head capacity feedlots than last August 1. On feed inventory has been up vs. year ago every month except for March this year, yet commercial beef production for the first seven months of the year trails last year's pace by 4.1%. Slaughter weights continue to run well ahead of last year's level, with the July federally inspected dressed cattle weight of 825 pounds eclipsing last year's number by 19 pounds. Weights have now been at least 14 pounds above the previous year for 12 consecutive months.

The July choice retail beef price declined for the second consecutive month to $6.37 per pound. This is only the second time that the retail price has declined in consecutive months since September 2012. The choice beef retail price was 1.69 times larger than the pork retail price in July, and 3.24 times larger than the composite chicken retail price.

Though the U.S. beef cow industry continues its expansion phase, the same cannot be said for Canada. July 1 beef cows in Canada numbered 3.79 million head, 3.4% lower than the prior year. The very slight increases in the July beef cow herd that took place from 2011 to 2013 have now been replaced by two consecutive years of decline.

Cattle slaughter for the week was 540 thousand head, unchanged from last week but 9.4% lower than the same week last year. Year to date cattle slaughter trails 2014 by 7.0%. The average dressed weight for steers slaughtered the week ending August 8 was 895 pounds, a jump of 9 pounds above the prior week and 20 pounds heavier than the same week last year.

Boxed beef cutout values treaded water this week, with the choice carcass cutout value this morning registering $244.77/cwt, up just 16 cents from last Friday and $5.43 below a year ago. The select cutout inched upward to $234.82/cwt, up 4 cents for the week. The choice-select spread remained just shy of $10 at $9.95/cwt.

Fed cattle prices lost the gains of last week and more. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $147.27/cwt, down $5.46 from last week and $5.55 lower than a year ago. The 5 area average dressed price for steers dropped $6.74 for the week to $232.55/cwt. This is $9.30 lower than last year's dressed price average.

Feeder steer and steer calf prices at Oklahoma City this week were steady to $5 lower. Prices for medium and large frame #1 steers by weight group were: 400-450# $289-$319.75, 450-500# $269-$285, 500-550# $250-$261, 550-600# $238-255, 600-650# $228-$244, 650-700# $220-$233, 700-750# $209-$228, 750-800# $210-$219, 800-900# $202.25-$213.50 and 900-1000#, $197-$202.50/cwt.

The August live cattle futures contract lost $3.72 for the week, closing at $145.00/cwt today. October fed cattle finished at $143.62/cwt and December at $145.85. The September feeder cattle contract lost $7.08 this week to end at $202.32/cwt.

September corn closed today at $3.65/bu, up 1 cent from last Friday. December closed at $3.77.

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