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Cattle Outlook: Pink Slime Impacts Beef Prices

10 April 2012
Ron Plain
Ron Plain

US - The publicity about Lean Finely Textured Beef (LFTB) and the unappealing new nickname associated with it is having a big impact on beef prices, writes Ron Plain, University of Missouri.

The price spread between 90 per cent lean fresh beef trimmings and 50% lean trimmings during the last week of March was a record $134.77/cwt. Fresh 90 per cent lean trimmings averaged $217.71/cwt and fresh 50 per cent lean trimmings were $82.94/cwt. The price spread widened further this week.

The LFTB process has been used for years to remove fat from beef trimmings. The recent adverse publicity from calling the product "pink slime" has caused the value of high fat beef trimmings to plummet. Yesterday, fresh 50% lean beef trimmings averaged $54.80/cwt. Five weeks ago, these trimmings averaged $100.66/cwt.

The beef cutout value was lower again this week for the fifth consecutive week. On Friday morning, the choice boxed beef carcass cutout value was $177.41/cwt, down $6.40 from last week. The select carcass cutout was down $8.17 from the previous Friday to $174.98 per hundred pounds of carcass weight. The choice-select price spread is $2.43, up from $0.65/cwt a week ago.

Fed cattle prices were sharply lower this week and are now below year-ago for the first time since early January 2010. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $121.91/cwt, down $3.81 from last week and down $1.21/cwt from the same week last year.

Steer prices on a dressed basis averaged $193.39/cwt this week, down $8.49 from a week ago and down $3.03 from a year ago. Steer dressed prices are $15.98/cwt above the choice cutout value. This week's cattle slaughter totaled 622,000 head, up 3.3 per cent from the week before, but down 1.3 per cent from a year ago. The average dressed weight for slaughter steers for the week ending on March 24 was 844 pounds, up 2 pounds from the week before, up 17 pounds from a year ago, and above a year earlier for the 11th consecutive week.

Feeder cattle prices were generally lower this week. Oklahoma City prices were mostly $4 to $8 lower with the ranges for medium and large frame #1 steers: 400-450# $213-$220, 450-500# $201-$214, 500-550# $188-$200, 550-600# $177-$191, 600-650# $169-$175, 650-700# $152-$168, 700-750# $149-$156.50, 750-800# $143.50-$152, 800-900# $134.25-$147, and 900-1000# $128-$134.25/cwt.

For the fifth consecutive week, live cattle futures contracts were lower this week. Because of the Good Friday holiday, the futures markets ended the week a day early. The April live cattle futures contract settled at $118.32/cwt on Thursday, down $2.13 compared to last Friday and down $12.60 from 5 weeks earlier. The June contract closed at $115.82/cwt, down 33 cents for the week. August fed cattle settled at $118.47 and October at $123.97/cwt.

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