Weekly US Cattle Outlook - Cattle on Feed Report Bullish

US - Weekly Cattle Outlook, 24th August 2007 - Weekly review of the US cattle industry, written by Glenn Grimes and Ron Plain.
calendar icon 27 August 2007
clock icon 3 minute read

The cattle on feed report came in some more bullish than the trade estimate but the futures market showed limited reaction to the report Monday morning. The number of cattle on feed August 1 in U.S. in feed lots with 1000 head or more one time capacity was down 4.8 percent from a year earlier. Placements on feed during July were down 17.2 percent and fed marketings during July were up 2.5 percent from 12 months earlier.

The placements of cattle on feed during July were the smallest of record for July for the current series, which started in 1996. All of the reduction in placement on feed were in cattle weighting less than 800 pounds. The number placed weighting less than 600 pounds was down 36.8 percent from 2006 the number placed weighing 600-699 pounds was down 22.6 percent, the number placed weighing 700-799 pounds was down 9.2 percent but the number weighting over 800 pounds was up 2 percent from 12 months earlier.

The total number of cattle and calves in the U.S. and Canada on July 1, 2007 was down 0.4 percent from a year earlier at 120.685 million head. The number of cows and heifers that had calved in the U.S. and Canada on July 1 was down 0.3 percent from last year and the number of heifers held for beef cow replacements was down 0.4 percent from July of 2006.

This data supports the belief that beef production will be down in the forth quarter of 2007 and in 2008 from a year earlier. The futures market for live cattle is now indicating prices for fed cattle from about $93 to 100 per cwt for the next year, which will likely regard continued growth in live cattle demand.

Beef exports during June were up 24.9 percent from a year earlier. Beef exports for January-June were up 19.2 percent from 12 months earlier.

Beef imports for the first six months of 2007 were down 1.3 percent from the same period in 2006. Net beef imports as a percent of U.S. product declined from 8.2 percent in January-June of 2006 to 7.9 percent for the same months of 2007. This is one of the reasons why the demand for life fed cattle in January-June was stronger than the consumer demand for beef.

Retail beef prices in July for choice beef was down 1.8 percent from June of 2007 but up 6.8 percent from July of 2006. The average retail beef prices for January-July was up 4.2 percent from a year earlier.

Everyone in the beef industry but the packers benefited from the higher retail prices for beef in January-July. The beef processor-retailer margin for this period this year was up 2.5 percent from last year and fed cattle prices were up 8.6 but packers margin was down 14.8 percent for the first seven months of 2007 compared to 2006.

Choice wholesale beef this Friday morning at $142.90 per cwt down $1.01 per cwt from a week earlier. Select beef was down $1.47 per cwt at 137.03 per cwt from seven days earlier.

The weighted average negotiated live fed cattle price for the five market area at $92.70 through Thursday up $2.46 per cwt from last week. The negotiated average carcass price for the five market area was up $3.10 per cwt at $142.45 per cwt.

Feeder steers and heifers steady to $1.00 per cwt higher than last week at Oklahoma City. Steer and heifer calves mostly $1.00-3.00 per cwt lower than seven days earlier.

The prices by weight groups of medium and large frame number one steers this week at Oklahoma City: 400-500 pounds $126-138 per cwt, 500-600 pounds $119.75-128 per cwt, 600-700 pound yearlings $120.50-127, 700-800 pounds $116-124, 800-1000 pounds $103.50-117.75 per cwt.

Slaughter this week under Federal Inspection estimated at 683 thousand head down 1.0 percent from a year earlier.

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