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Cattle Outlook:Cut-out Value & Cattle On Feed Down

26 September 2011
Ron Plain
Ron Plain

US - USDA says that 0.8 per cent fewer cattle were placed on feed this August than last. They report that August marketings of fed cattle were up 6.5 per cent, in part due to one extra slaughter day. That means the number of cattle on feed at the start of September was up 5.4 per cent over last year.

These numbers are bullish. Pre-release trade estimates had placements up 7.7 per cent, marketings up 5.7 per cent and the number on feed up 7.9 per cent compared to a year ago.

The amount of beef in cold storage at the end of August totaled 429 million pounds, up three per cent from the month before and up 11 per cent from a year ago.

Through August steer slaughter is up 0.6 per cent, heifer slaughter is down 0.7 per cent, dairy cow slaughter is up 4.5 per cent and beef cow slaughter is up 2.2 per cent.

Friday morning the choice boxed beef carcase cutout value was $183.78/cwt, down $2.01 from last week. The select carcase cutout was down $4.19 from the previous Friday to $169.49 per hundred pounds of carcase weight. The choice-select spread hasn't been this large since December 2007. Why is not clear.

There has been a slight decrease in the percent of cattle grading choice, but not enough to drive this much price spread.

The five-area average price for slaughter steers sold through Thursday of this week on a live weight basis was $115.87/cwt, down $1.36 cents from last week. Steers sold on a dressed weight basis averaged $183.11/cwt, $3.56 lower than the week before.

This week's cattle slaughter totaled 663,000 head, up 1.5 per cent from the week before, but down 0.3 per cent compared to the same week last year. The average steer dressed weight for the week ending 10 September was 855 pounds, up six pounds from the week before, four pounds heavier than for the same week in 2010, and above year-earlier for the 40th week in a row. Year-to-date cattle slaughter is down 0.1 per cent and beef production is up 0.2 per cent.

Cash bids for feeder cattle around the country this week were mixed with about as many locations higher as lower. Prices this week at Oklahoma City were steady to $3 lower with price ranges for medium and large frame #1 steers: 400-450# $141-$154, 450-500# $138.50-$148.50, 500-550# $132-$141, 550-600# $129.50-$140.25, 600-650# $125-$141, 650-700# $125-$140, 700-750# $125-$135.50, 750-800# $130.50-$136, 800-900# $121.50-$128 and 900-1000# $118-$120.25/cwt.

The October fed cattle futures contract ended the week at $116.82/cwt, down $1.68 from last week's close. December cattle lost $2.23 to end the week at $116.72/cwt. February live cattle settled at $119.60/cwt, down $2.10 from last Friday.
The December, March, May and July corn futures contracts each ended this week 54 cents lower than last. The December contract settled at $6.385, March at $6.52, May at $6.595 and July at $6.635 per bushel

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