Weekly US Cattle Outlook: Cattle on Feed Down

US - Weekly Cattle Outlook, 27 February 2009 - Weekly review of the US cattle industry, written by Glenn Grimes and Ron Plain.
calendar icon 6 March 2009
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Ron Plain
Ron Plain

The number of cattle on feed on February 1 was down 5.7 percent according to the USDA the same as the trade estimates. The number of cattle placed on feed during January was up four percent for 2008 whereas the trade estimate was for a 3.1 percent increase. Fed marketings during January were down 5.7 percent but the trade was for a decline of 7.4 percent.

The live cattle futures market showed some strength for contracts through October 2009 with prices some higher but the distant contracts were all some lower Monday following the report.

The increase in placements was all in cattle weighing above 600 pounds. The number placed in January weighing less than 600 pounds was down five percent. The number placed weighing 600-699 pounds was up 8.1 percent, the number placed weighing 700-799 pounds was up 5.3 percent, and the number placed weighing 800 pounds or more was up 6.3 percent from a year earlier.

This may be a short-term situation but our beef demand index for November-January show a small growth of one percent. Certainly, three months is not long enough to project a trend; but with the current weak general economy and high feed prices, we will take anything we can get positive for demand even for a short time period.

Retail beef prices in January were down 1.2 percent form December but up 5.4 percent from January of 2008 but fed cattle prices were 9.7 percent below 12 months ago. Marketing margins in January were basically the same as December 2008 but nearly 16 percent above a year earlier.

This data indicates we have a situation where if suppliers are tightened some we could get a substantial rally in fed cattle prices. This is probably the major reason why April live cattle futures are higher than February by $2-3 per cwt.

Feeder cattle and calf prices were hit pretty hard this week at Oklahoma City with losses of $4-8 per cwt. The price for medium and large frame Number One steers at Oklahoma City by weight groups were: 400-500 pounds at $104-117 per cwt, 500-600 pounds at $94-111 per cwt, 600-700 pounds were $88-99.50 per cwt, 700-800 pounds $83-95.50 per cwt and 800-1,000 pounds were $81.50-86.75 per cwt.

Choice wholesale beef prices this Friday morning at $132.11 per cwt was 2.05 per cwt lower than a week earlier. Select beef at $130.58 per cwt was $3.18 per cwt lower than seven days earlier.

The weighted average price of live fed cattle for the five-market area through Thursday at $79.91 per cwt was $0.45 per cwt higher than last week. The weighted average negotiated carcass price at $129.73 per cwt was up $0.46 per cwt from seven days earlier.

Slaughter this week under Federal Inspection was estimated at 618 thousand head, down 2.2 percent from 12 months earlier.

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