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CME: Total Cattle Slaughter During W30 Higher Than Previous Week

30 July 2019

US - Steer and heifer slaughter has been running above year ago since early June but lighter carcass weights and robust demand have managed to support overall wholesale beef values, according to Steiner Consulting Group, DLR Division, Inc.

USDA reported that total cattle slaughter last week was 651,000 head, 0.34 percent higher than a week ago and 1.3 percent higher than a year ago. We estimate fed cattle slaughter (steers + heifers) for the week at 522,000 head, 2.3 percent higher than a year ago.

The week prior fed slaughter was up 3.6 percent and for the last seven weeks slaughter has averaged 2.5 percent above year ago levels. Based on the data up to this point, it would be fair to assume an increase in feedlot marketings for the month of July, a number that will be included in the USDA feedlot survey later in August.

With a few data points missing, we project a feedlot marketing number for July that is 6.6 percent higher than the year prior. Keep in mind that there was one additional marketing day in July 2019 (a Wednesday) compared to July 2018. If we were to adjust for the additional day, the daily marketing rate is about 2 percent higher than the year before.

The most current data on fed cattle weights is for the week ending 13 July, showing the average weight of steers at 861 lb./carcass vs. 867 for the same week a year ago. The average dressed carcass weight of heifers that went to market that week was 792 vs. 803 last year. The weighted average carcass weight of steers and heifers that came to market during the week ending 13 July 13 was 837 pounds compared to 844 pounds a year ago.

Since then we think weights have continued to move higher but at a relatively tepid pace and they remain below last year’s levels. The average choice beef cutout last week was $213.1/cwt, up $8.3/cwt or 4 percent compared to a year ago.

During much of June the y/y gains in the beef cutout were driven by higher prices paid for end cuts (rounds and chucks). We think a shift towards featuring more ground beef may have contributed to the y/y improvement in the value of end cuts. That has continued in July as well although now we are also seeing some positive contributions from the middle meats.

As we look at the gains in the value of the choice cutout last week vs. the same week last year, about two-thirds of the gains are due to higher loin/rib prices. This context should help explain why packers have been willing to pay higher prices than expected, driving the +450 point gain in August fed cattle futures in July.


Daily Livestock Report - Copyright © 2008 CME. All rights reserved.


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