Cattle Outlook

US - USDA’s January cattle inventory report showed a continuation of the herd reduction that began in 2007, writes Ron Plain from the uiversity of Missouri.
calendar icon 7 February 2011
clock icon 3 minute read
Ron Plain
Ron Plain

The total inventory of cattle in the US on January 1 was 92.58 million head, down 1.4 per cent from a year earlier and 4.1 per cent below the last cycle peak. Last year’s calf crop totaled 35.68 million head, down 0.7 per cent from 2009, down for the 15th consecutive year, and the smallest calf crop since 1950.

The nation’s inventory of cows that have calved was down 1.1 per cent at the start of 2011, with beef cow numbers down 1.6 per cent, but the inventory of milk cows up 0.7 per cent. The number of beef heifers expected to calve this year is down 7.2 per cent from a year ago, but the number of dairy heifers expected to calve are up 2.9 per cent.

The combined inventory of cows and heifers implies the 2011 calf crop will 1.3 per cent smaller than in 2010. The supply of feeder cattle at the start of 2011 was 1.4 per cent smaller than a year ago. Thus, it looks like cattle slaughter will be below year-earlier levels for the next few years. Once cattlemen start saving heifers and cows to expand the herd, beef supplies will tighten significantly. The cattle inventory clearly implies record cattle prices in coming years.

Fed cattle prices were higher this week. The 5-area daily weighted average price for slaughter steers sold through Thursday of this week on a live weight basis was $105.77/cwt, up $1.46 from a week earlier. Steers sold on a dressed weight basis this week averaged $170.08/cwt, $2.38 higher than the week before. This week last year, slaughter steer prices averaged $83.74/cwt live and $136.34/cwt dressed.

The boxed beef cutout value was lower this week. On Friday morning the choice boxed beef carcass cutout value was $171.42/cwt, down $1.13 for the week. The select cutout was down $1.19 from the previous Friday to $169.93 per hundred pounds of carcass weight.

This week’s cattle slaughter totaled 624,000 head, down 4.0 per cent from the week before and down 2.7 per cent compared to the same week last year. Snow and bitter cold this week slowed movement out of feed yards. Steer carcass weights averaged 850 pounds during the week ending January 22. That was up 1 pound from the week before and 14 pounds heavier than a year ago.

Cash bids for feeder cattle around the country this week were mostly lower with light volume in parts of the country due to heavy snow. Oklahoma City prices were steady to $8 lower than the previous week with price ranges for medium and large frame #1 steers were: 400-450# $147-$158, 450-500# $138-$152, 500-550# $136-$144, 550-600# $133-$138.50, 600-650# $119-$137.75, 650-700# $120-$127, 700-750# $122.25-$125.75, 750-800# $119-$126, and 800-1000# $114-$122/cwt.

The February fed cattle futures contract ended the week at $108.25/cwt, up 75 cents from a week ago. The April contracted closed out the week at $113.02/cwt, up 25 cents for the week.

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