Weekly US Cattle Outlook - Corn Futures Trade Above $7/Bushel

US - Weekly Cattle Outlook, 6th June 2008 - Weekly review of the US cattle industry, written by Glenn Grimes and Ron Plain.
calendar icon 9 June 2008
clock icon 2 minute read
Ron Plain
Ron Plain

Perhaps the biggest news this week for the cattle industry is the fact that corn futures traded above $7/bushel for the first time. Strong demand and concerns over the size of this yearÆs crop are key factors. The July 2009 corn futures contract ended the week at $7.01/bushel. Soybean futures were also sharply higher this week.

Packer bids for fed cattle were mostly steady this week. The 5-area daily weighted average price for slaughter steers sold through Thursday was $94.03/cwt on a live weight basis, up $0.55 from a week earlier and $2.83 higher than a year ago. Steers sold on a dressed basis averaged $148.02/cwt, $1.85 lower than the week before but $3.67 higher than the same week of 2007.

Choice boxed beef cutout values were higher this week. On Friday morning, the choice carcass cutout value was $1.5741/pound, up 2.06 cents for the week. The select cutout was up 0.46 cents from the previous Friday to $1.5276 per pound. The choice-select spread has been unusually narrow thus far in 2008.

The June live cattle futures contract ended the week at $93.85/cwt, down $2.67 for the week. August settled at $100.20, down $1.65 from the week before. The futures market continues to be optimistic about fed cattle prices in late 2008 and in 2009. October settled at $107.42/cwt and the December live cattle contract ended the week at $109.30. February 2009 closed at $110.60 and April 2009 settled at $112.05/cwt.

Federally inspected cattle slaughter for this week totaled 692,000 head, down 1.6% compared to a year ago. Year-to-date cattle slaughter is up 1.3% and beef production is up 2.4%.

Steer carcass weights for the week ending on May 24 averaged 813 pounds, 9 pounds heavier than for the same week in 2007. This is the closest to year-ago steer weights have been since early February.

It looks like the cow herd is shrinking. Through May 24, dairy cow slaughter is up 0.9% and beef cow slaughter is up 7.4% compared to the same weeks last year. Year-to-date, steer slaughter is up 0.7% and heifer slaughter is up 3.5%. The larger increase in heifer slaughter implies fewer heifers being held for breeding.

Cash bids for feeder cattle were mostly higher, especially for sales early in the week. The price ranges at Oklahoma City for medium and large frame steers were: 450-500# $127.25-$128.50, 500-550# $116-$130, 550-600# $116-$121, 600-650# $116-$119, 650-700# $109-115.50, 700-750# $110.50-113.75, 750-800# $106.25-$112.50, and 800-1000# $96.75-$110.50/cwt.

The higher corn prices pushed feeder cattle futures contracts lower. The August contract ended the week at $112.25/cwt, down $3.77 for the week.

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