Weekly US Cattle Outlook - Retail Beef Prices Up
US - Weekly Cattle Outlook, 21st December 2007 - Weekly review of the US cattle industry, written by Glenn Grimes and Ron Plain.
The average retail beef prices for Choice beef in November at $4.159 per pound was up 0.7 percent from October and up 4.9 percent from November 2006. The retail Choice beef price for January-November was up 4.7 percent from a year earlier.
The processor-retailer and cattle feeders benefited from the higher beef prices. The processor-retailer margin was up 9.4 percent for January-November compared to 12 months earlier, and the cattle feeder prices for fed cattle were 7.4 percent higher in 2007 than 2006. However, the packer margin was down 18.2 percent from 2006. Beef packers have been challenged by tight margins most of the time since 2003 when the cow with BSE was found in Canada.
Speaking of BSE, another cow was found with BSE in Canada in mid-December. However, the cow was 13 years old, which means the cow was 3 years old when cattle feed with cattle bone meal and scraps was legally fed to cattle. This case is not expected to affect Canada's risk status. Therefore, the odds are high that it will be business as usual.
Beef exports for October were up 36.2 percent from the same month in 2006. For January-October, beef exports were up 27.5 percent from 12 months earlier. Our exports by country for January-October were down 10.8 percent to Mexico, up 285 percent to Japan, up sharply to South Korea, up 41 percent to Canada, down 2.1 percent to Taiwan, up 210 percent to Hong Kong, up 69.4 percent to Mainland China, up 211 percent to Vietnam, and up 25.5 percent to all other countries.
Beef imports for January-October were up 2.2 percent from the same months of 2006. Net beef imports as a percent of production were at 6.6 percent of production, down from 7.6 percent a year earlier. This is one of the reasons that the demand for live fed cattle is up more in 2007 then consumer demand for beef.
Feeder cattle at Oklahoma City this week were steady with a week earlier. Seer and heifer calves were $3-4 per cwt higher, recovering some of the loss of last week's weather market.
Prices by weight groups for medium and large frame Number 1 steers were: 400-500 pounds $115-134 per cwt, 500-600 pounds $108.50-120.50 per cwt, 600-700-pound calves $100-108.50, 600-700-pound yearling $106-111 per cwt, 700-800 pounds $104-108.50 per cwt and 800-1,000 pounds $92-103.10 per cwt.
Wholesale beef prices pushed above the $150 per cwt mark this week but could not hold the gain in price. Choice beef Friday morning at $148.08 per cwt was down $0.31 per cwt from a week earlier. Select beef at $136.04 per cwt was up $3.24 per cwt from seven days earlier.
The weighted average live fed cattle price this week through Thursday at $90.93 per cwt was down $1.65 per cwt from a week earlier. The negotiated carcass beef price at $143.80 per cwt for the five-market area was down $1.80 per cwt from seven days earlier.
Slaughter this week under Federal Inspection was estimated at 636 thousand head, up 7.6 percent from a year earlier.
The December 1 Cattle on Feed report came in more bearish than the trade expectations. The number on feed according to USDA was up 0.9%. The trade was expecting the number to be down 0.6%.
The number of cattle placed on feed during November was up 12 percent; the trade estimate was for an increase of a little less than 4 percent. Fed cattle marketings during November were up 1 percent; the trade estimate was for marketings to be down 1.9 percent. A more detailed summary of the report will be in next week's letter.
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