Cattle Outlook: USDA Predicts More Beef Production, Consumption This Year

US - USDA's May WASDE is predicting 4.7 per cent more beef this year than last and 4.0 per cent more beef in 2017 than this year, write Ron Plain and Scott Brown, Ag Economics, MU.
calendar icon 16 May 2016
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Total red meat and poultry production is expected to be up 3.1 per cent this year and up 2.9 per cent next. That is faster than population growth or expected export growth, so US per capita meat consumption is expected to increase 3.8 pounds this year and 2.8 pounds next year.

More meat means lower prices. Slaughter steer prices are forecast to be roughly $22/cwt lower this year than in 2015 and another $3/cwt lower in 2017. USDA is predicting a record corn harvest this fall with the marketing year average price for corn between $3.05 and $3.65 per bushel.

USDA's weekly Crop Progress report says 9 per cent of US pastures were in poor or very poor condition on May 8. That compares 10 per cent the week before and 12 per cent poor or very poor a year earlier.

Both boxed beef values and fed cattle prices were higher last week. On Friday morning the choice boxed beef cutout value was $217.94/cwt, up $14.28 from the previous Friday, but down $44.75 from a year ago. The select carcass cutout on Friday morning was $205.82/cwt, up $10.91 from the previous week, but down $44.70 from a year ago. The choice-select spread was quite large at $12.12/cwt.

Fed cattle prices were strongly higher last week in light volume. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $128.00/cwt, up $9.97 from the previous week's average, but down $31.44 from a year ago. The 5-area dressed steer price averaged $202.86/cwt, up $12.88 from the week before.

Last week's cattle slaughter totalled 601,000 head, up 2.4 per cent from the previous week and up 5.8 per cent from a year ago. Year-to-date steer slaughter is up 6.8 per cent. It looks like the upturn in the calf crop occurred earlier than USDA's cattle inventory survey indicated.

The average steer dressed weight for the week ending on April 30 was 868 pounds, down 2 pounds from the week before, but up 3 pounds from a year ago. This was the 98th consecutive week with steer weights above the year-ago level.

Prices for feeder and stocker cattle last week at the Oklahoma City Stockyards were $4 to $10 higher in good volume compared to the previous week. Prices for medium and large frame #1 steers by weight group were: 400-450# $188-$199, 450-500# $163-$199, 500-550# $165.50-$188.50, 550-600# $171-$181.50, 600-650# $150-$175, 650-700# $149-$166.75, 700-750# $140-$158.50, 750-800# $135-$156.50, 800-900# $138-$149.50 and 900-1000# $129-$140.50/cwt.

On Friday, the June live cattle futures contract settled at $123.42/cwt, up $2.695 for the week. August fed cattle settled at $118.72/cwt, up 82 cents from the previous Friday. The October contract ended the week at $117.97/cwt. May feeder cattle futures ended the week at $147.05/cwt, down 32 cents from a week earlier. August futures lost 92 cents this week to close at $146.25/cwt. September settled at $144.22/cwt.

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