Weekly US Cattle Outlook - Retail Choice beef prices up

US - Weekly Cattle Outlook, 22nd June 2007 - Weekly review of the US cattle industry, written by Glenn Grimes and Ron Plain.
calendar icon 25 June 2007
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Retail Choice beef prices in May were up 0.3 percent from April and up 8.8 percent from May 2006. For January - May, retail Choice beef prices were up 3.2 percent from 12 months earlier.

All of the increase in retail beef prices was bid into live fed cattle prices. For January - May of 2007, the total marketing margin for beef was 2.1 percent below a year earlier. The packer margin was down 2.5 percent and the processor-retailer margin was down 2.0 percent from the same months in 2006. Fed cattle prices for January - May were up 8.4 percent from a year earlier and May was up 21.7 percent from May 2006.

The trade estimates of the June 1 Cattle on Feed report are for the number to be slightly above a year earlier for the first time since January of this year. The estimated placement on feed during May is for a 10.3 percent increase from last year and fed marketings during May to be down 1.9 percent from 2006.

Placements of cattle on feed during April were quite small at 1,573,000 head. If the estimated number for placements turns out to be true, the increase in placements from April to May would be 34 percent with a number at 2,110,000 head. This would be the largest monthly placement of cattle on feed since October 2006.

Distillers dried grain (DDG) prices in northwest Iowa have declined about $20 per ton in the last 10 weeks, while corn prices have increased $20 per ton during the same period. For the week ending June 15, the price of DDG per ton is over $40 less than corn. This decrease in DDG price is increasing the relative competitiveness of the cattle industry to pork and chicken.

Feeder steers and steer calves were firm to $2 per cwt higher with exception of a few 6-weight steer calves at $2 per cwt lower. Feeder heifers and heifer calves were steady at Oklahoma City this week compared to last week.

The prices by weight groups for medium- and large-frame number one steers at Oklahoma City this week were: 450-500 pounds $125.50-136 per cwt, 500-600 pounds $120-137 per cwt, 600-700-pound calves $105-115 per cwt, 600-700-pound yearlings $110-119 per cwt, 700-800 pounds $108-113.50 per cwt, and 800-1,000 pounds $97.75-109.75 per cwt.

Feeder cattle prices are holding very strong with $4-per-bushel corn.

The weighted average live price of cattle was pushed lower again this week as packers strived to improve margins. The 5-market weighted average price at $86.30 per cwt was $3.40 per cwt lower through Thursday than a week earlier. The weighted average carcass price was down $3.70 per cwt at $136.90 per cwt through Thursday.

The wholesale price for Choice beef Friday morning at $140.17 per cwt was down $5.08 per cwt from 7 days earlier. The price of Select beef was down $5.09 per cwt from last Friday at $134.34 per cwt.

Slaughter this week under Federal Inspection was estimated at 698 thousand head, down 1.5 percent from a year earlier.

The June 1 Cattle of Feed report came in a little more bearish than the trade estimates. The trade estimates were for the number on feed to be up 0.1 percent. According to USDA, the number was up 0.8 percent. The trade estimates expected placements on feed during May to be up 10.3 percent, and they were up 13.5 percent. Fed marketings during May were down 3.5 percent from 2006. The trade estimate was for fed marketings to be down 1.9 percent.

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