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CME: Cattle Weights Still Above Last Year's Levels

11 April 2016

US - AMS has reported actual slaughter and weight data for the week ending March 26th, write Steve Meyer and Len Steiner.

These numbers showed steer dressed weights at 887 pounds, down 8 pounds from the previous week but still 13 pounds above year ago levels.

This most recent 8 pound drop is the largest week-to-week drop since the middle of February.

Seasonally, cattle weights decrease starting in January until they bottom in May. Taking a historical look, based on a simple average of weekly data, monthly average steer dressed weights decline about 3 per cent from January to May.

This would put upcoming May average steer dressed weights at 873 pounds, 27 pounds below January 2016 and 8 pounds above May 2015. So far however, steer weights have moved counter seasonally at times, actually increasing on average from February to March.

This would indicate that either we will not see the historical magnitude of decrease from January to May or, when weights do bottom in May they will not be as low as expected.

Of course, these weights will be highly dependent upon weather conditions and marketing rates at the feedlot level.

Moving on, steer slaughter levels have been above year ago numbers every week this year so far. Year to date, heifer slaughter is tracking slightly below 2015’s and total cow slaughter is running even to year ago numbers.

Both dairy cow and beef cow slaughter are even with year ago levels. With this increase in steer slaughter, combined with heavier weights, beef production year to date is about 4 per cent larger than 2015’s.

We will wait for monthly livestock slaughter numbers before we can officially report quarterly production levels.

This increased beef production is fundamentally hitting the market at an appropriate time, as we move into the spring and summer months of increased beef demand.

Box prices are not exactly following their normal seasonal pattern though. During the end of March, boxed beef prices moved higher which was slightly early in the year for their normal seasonal upswing.

Since the cutout value’s most recent high on March 17th at $234.64 per cwt., it has decreased to $214.74 as of yesterday afternoon.

While the decreasing value is not a bright spot for beef currently, the past couple days have seen an uptick in boxed beef movement. This can probably be attributed to the start of mid-month buy ups for May 1 beef featuring at retail level.

Optimistically, the incoming spring and summer weather could still provide some support for beef prices as consumers fire up their grills.

On the live animal side, this week’s USDA-AMS Oklahoma City Auction feeder cattle prices were steady to up $3 per cwt. compared to the previous week.

Feeder animal demand appears to still be strong as people are buying for spring and summer grazing programs. Mid-week fed cattle cash trade has been more active this week than it has in a long time.

On Tuesday, Wednesday and Thursday, steers traded between $133 and $134 per cwt. Looking ahead, some of the key market factors to watch will be weather conditions, feedlot marketing rates, and retail featuring.

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