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Cattle Outlook

28 February 2011
Ron Plain
Ron Plain

US - The government now says the economy grew at a 2.8 per cent rate during the fourth quarter of 2010 rather than the 3.2 per cent pace they had reported earlier, says Ron Plain from the University of Missouri.

Slow growth is not good for meat demand. The unemployment rate is at nine per cent and gasoline prices are above $3/gallon. If cattle prices are going to get as high as the futures market is predicting, consumer demand must be stronger than last year. Maybe it will be.

The average retail price of beef in January was higher than for any month in history. The average grocery store price of choice beef last month was $4.542 per pound, up 10.4 cents from December and 35.3 cents higher than 12 months earlier. January beef production was up 1.9 per cent compared to a year earlier.

Stocks of beef, pork and chicken in cold storage were all higher at the end of January than a year earlier. Frozen beef supplies were up three per cent from the month before and up 8 per cent compared to a year earlier.

Fed cattle prices are at a record level. The 5-area daily weighted average price for slaughter steers sold through Thursday of this week on a live weight basis was $111.00/cwt, up $4.01 from a week earlier. Steers sold on a dressed weight basis this week averaged $179.75/cwt, $4.86 higher than the week before. This week last year, slaughter steer prices averaged $90.95/cwt live and $144.55/cwt dressed.

The boxed beef cutout value moved higher this week, which is good. On Friday morning the choice boxed beef carcass cutout value was $170.20/cwt, up $3.24 for the week. The select cutout was up $4.52/cwt from the previous Friday to $170.75 per hundred pounds of carcass weight. The fact that the cutout value of select carcasses is higher than for choice carcasses is not good. The choice-select spread is often small at this time of year, but select above choice is usually a sign of weak beef demand. The inverse spread may be weather related as a higher percent of choice beef moves through restaurants.

This week’s cattle slaughter totaled 642,000 head, down 1.4 per cent from the week before and up 0.9 per cent compared to the same week last year. Steer carcass weights averaged 835 pounds during the week ending February 12. That was down 10 pounds from the week before but 4 pounds heavier than a year ago.

Cash bids for feeder cattle around the country this week were mostly steady to $3 higher. Oklahoma City prices were $1 to as much as $5 higher than the previous week with price ranges for medium and large frame #1 steers were: 400-450# $162-$170, 450-500# $156.50-$165.50, 500-550# $150-$160.75, 550-600# $147-$155, 600-650# $137.50-$148, 650-700# $131.75-$139.50, 700-750# $129-$136, 750-800# $126-$134, and 800-1000# $114.60-$128.50/cwt.

The April fed cattle futures contract ended the week at $114.10/cwt, down $1.05 from a week ago. The June contracted closed out the week at $115.85/cwt. The October and December contracts closed above $120/cwt.

TheCattleSite News Desk

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