Weekly US Cattle Outlook - Cattle on Feed Report for Feedlots Bearish

US - Weekly Cattle Outlook, 28th December 2007 - Weekly review of the US cattle industry, written by Glenn Grimes and Ron Plain.
calendar icon 31 December 2007
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The December 1 Cattle on Feed report for feedlots with a one-time capacity of 1,000-head-or-more came in some more bearish than the trade estimates. The average of the trade estimates was for the on-feed number to be down 0.6 percent, but the report showed the number up 0.9 percent from twelve months earlier. The trade estimates average was for placements during November to be up 3.9 percent, but USDA's estimate was an increase of 12.3 percent. The trade estimates was for marketings during November to be down 1.9 percent and the USDA number showed marketings down 3.3 percent.

The futures market for live cattle responded with a decline on Monday of $0.95 per cwt for the February contract, down $0.97 per cwt for the April contract, down $0.92 per cwt for the June contract and losses of $0.42 to $0.77 per cwt for the remainder of the 2008 contracts.

The cattle placed on feed during November were lighter than both a year earlier and in recent months. The number of cattle placed on feed during November weighing less than 600 pounds was up 23.4 percent from a year earlier; the number placed weighing 600-699 pounds was up 16.1 percent; the number placed weighing 700-799 pounds was up 4.0 percent; and the number placed weighing 800-pounds-plus was down 1.1 percent from twelve months earlier.

Fed cattle marketings for September, October, and November for 2006 was 5.322 million head. For 2007, the fed marketings were 5.320 million head, down only two thousand head from a year earlier.

A larger decrease in fed marketings was expected due to the 13 percent decrease in placements during June, July and August. However, a substantial portion of the change between 2006 and 2007 was due to large placements of lighter weight cattle in these months of 2006. Placements during June, July and August of 2006 were up 14 percent from the same months of 2005. The larger placements of cattle on feed during these three months of 2006 was probably due to dry weather in much of the west and southwest U.S.

The demand for beef and pork at the consumer level for January-November were both up with beef showing a growth of 0.9 percent and pork up 2.3 percent from the same months of 2006. Both live fed cattle and live hogs showed robust growth for the first 11 months of 2007 compared to 2006, with fed cattle up 3.4 percent and live hogs up 3.2 percent.

The larger growth for fed cattle demand than beef demand is believed to be due, at least in part, to the larger exports of beef in 2007 than in 2006.

Wholesale beef prices for this holiday-shortened week showed Choice beef Friday morning at $146.82 per cwt, down $1.26 per cwt from a week earlier. Select beef at $136 per cwt was down $0.04 per cwt from 7 days earlier.

The live price for fed cattle for the five-market area at $91.95 per cwt through Thursday was up $1 per cwt from last week. The weighted average carcass price for negotiated cattle through Thursday at $146.40 per cwt was up $2.60 per cwt from seven days earlier.

There was no feeder cattle sale in Oklahoma City this week due to the Christmas holiday. Cattle slaughter under Federal Inspection was estimated at 483 thousand head, down 8.0 percent from 12 months earlier.

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