Cattle Outlook: Dry Weather A Concern

US - It is getting dry in too many places. USDA says only 63 per cent of the corn crop was in good or excellent condition on June 17. That compares to 66 per cent good or excellent the week before and 70 per cent a year ago, writes Ron Plain and Scott Brown from the University of Missouri.
calendar icon 25 June 2012
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Ron Plain
Ron Plain

The Crop Progress report says 56 oer cent of the soybean crop was rated good or excellent on June 17 compared to 60 per cent a week earlier and 68 per cent a year ago. Nationally, 28 per cent of pastures were rated poor or very poor in mid June. That compares to 27 per cent poor or very poor the week before and 25 per cent a year ago.

Preliminary data indicate retail beef demand may have rebounded in May after a 1.8 per cent decline in April. Export demand for beef was down 9.9 per cent in April. Fed cattle demand was down 5.6 per cent in April and down 0.3 per cent in May. Thus far, 2012 domestic meat demand appears little changed from January-May 2011.

Cattle slaughter during the first five months of 2012 was down 2.8 per cent. Beef cow slaughter was down 7.2 per cent, steer slaughter was down 2.1 per cent and heifer slaughter was down 4.2 per cent. The sharp drop in both heifer slaughter and beef cow slaughter may indicate the early stage of herd rebuilding. However, January-May dairy cow slaughter was up 4.4 per cent compared to last year leaving combined beef and dairy cow slaughter down only 1.7 per cent, less than the drop in steer slaughter and down less than the decline in the January 1 cow inventory (which was down 2.2 per cent).

The beef carcass cutout value was lower this week. On Friday morning, the choice boxed beef carcass cutout value was $196.90/cwt, down $1.68 from the previous Friday. The select carcass cutout was down 96 cents from the previous week to $180.44/cwt of carcass weight. The choice-select spread is now a strong $16.46/cwt.

Fed cattle prices were also lower this week. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $117.80/cwt, down $1.68 from last week, but up $5.63/cwt from the same week last year. Steer prices on a dressed basis averaged $187.97/cwt this week, down $3.35 from a week ago, but up $9.11 from a year ago.

This week’s cattle slaughter totaled 649,000 head, down 0.6 per cent from the week before and down 5.9 per cent from a year ago. The average steer dressed weight for the week ending on June 9 was 848 pounds, down 2 pounds from the week before, up 19 pounds from a year ago, and above a year earlier for the 22nd week in a row.

Oklahoma City feeder cattle prices this week were mostly $1 to $5 lower with medium and large frame #1 steers selling for: 400-450# $187.50, 450-500# $185-$189, 500-550# $176-$179, 550-600# $169.25-$178.25, 600-650# $160-$167, 650-700# $149-$166, 700-750# $150-$155, 750-800# $145-$153.75, 800-900# $140-$150, and 900-1000# $130-139.75/cwt.

Fed cattle futures ended the week higher. The June live cattle contract settled at $116.90, up 75 cents from the previous Friday. The August contract also settled at $116.90. October ended the week at $121.20 and December at $124.62/cwt.

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