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CME: Total Cattle Slaughter During W23 Up 13%

13 June 2017

US - Total cattle slaughter last week was reported at 622,000 head, 13 per cent higher than the previous (holiday) week and 4.7 per cent higher than the same week a year ago, reports Steiner Consulting Group, DLR Division Inc.

We do not have USDA estimates for the breakdown of fed and non-fed cattle but our best guess at this point is that fed cattle slaughter for the week surpassed 500,000 head, making it the largest fed cattle slaughter week so far this year.

If we are correct in our estimates, fed slaughter for the week was 3.6 per cent higher than a year ago . The increase in fed cattle slaughter has come even as front end supplies have been particularly tight.

The inventory of +150day cattle on 1 May was 32 per cent less than the previous year and the inventory of +120day cattle was 10 per cent less than the previous year.

According to USDA, total beef production last week was estimated at 489.9 million bounds, 1.7 per cent higher than last year. Fed beef production for the week was steady to maybe under year ago levels due to a combination of lighter carcass weights as well as more heifers in the slaughter mix.

Market participants will continue to focus on USDA reported steer weights for an indication of feedlot currentness. Keep in mind that the steer weight data reported by USDA on Thursday was for the week ending 27 May.

The following chart shows our projections for the week of 3 June and 10 June. Those estimates are derived from slaughter weights reported by packers into the USDA Mandatory Price Reporting system.

But even as weights may have been moving higher in the last two weeks, the increase in largely in line with what we would expect for this time of year. One needs to consider that cattle feeding was significantly disrupted at the end of April due to late spring snow storms and producers for the most part are still not where they should be for this time of year.

There is still a wide gap between last year and this year, which in the short term will limit the supply of beef, particularly fat beef trimmings. The price of 50CL beef trim has adjusted lower but at $140/cwt it is not exactly a bargain for this time of year.

Packers also have been quite successful in puttng more money on end cuts (rounds and chucks) and in turn this has helped support the beef cutout at much higher levels than earlier expected.


Daily Livestock Report - Copyright © 2008 CME. All rights reserved.


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