Cattle Outlook: Cattle on Feed Below Trade Expectations

US - USDA's July cattle on feed report said June placements were 103.0 per cent of a year ago and June marketings were 109.4 per cent. The number of cattle on feed on July 1 totaled 10.356 million head, up 1.2 per cent compared to 12 months earlier, write Ron Plain and Scott Brown, Ag Economics, MU.
calendar icon 25 July 2016
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Ron Plain
Ron Plain

Placements and the number on feed were below most trade expectations. Steers on feed were down 0.6 per cent compared to July 1, 2015 while heifers on feed were up 4.8 per cent year-over-year.

Calculations by the Livestock Marketing Information Center indicate average unhedged June closeouts for cattle feeders were in the red by nearly $86 per head. This was better than the $139 per head loss a year ago.

Commercial cattle slaughter totaled 2.7057 million head in June. That was up 9.7 per cent compared to a year earlier. June steer slaughter was up 11.9 per cent, heifer slaughter was up 4.9 per cent and cow slaughter up 9.8 per cent compared to June 2015.

USDA weekly crop progress report said that 14 per cent of US pastures were in poor or very poor condition as of July 17. That is up 1 point from the week before and 3 points higher than a year ago. Corn futures were lower for the fifth week in a row.

Fed cattle prices are lower for the third consecutive week. Sales volume was heavy this week. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $114.65/cwt, down $2.35 from last week's average and down $30.75 from a year ago. The 5-area dressed steer price averaged $184.83/cwt, down $2.59 from the week before and down $47.20 from a year ago.

This morning the choice boxed beef cutout value was $200.36/cwt, down $5.01 from the previous Friday and down $9.50 from two weeks ago. The select carcass cutout this morning was $189.96/cwt, down $3.28 from last week and down $7.01 compared to two weeks earlier. The choice-select spread, $10.40/cwt this morning, remains large.

This week's cattle slaughter totaled 595,000 head, down 0.5 per cent from last week, but up 11.2 per cent from a year ago. The average steer dressed weight for the week ending on July 9 was 875 pounds, up 7 pounds from the week before, down 10 pounds from a year ago, and below the year-ago level for the tenth consecutive week.

Feeder cattle prices at Oklahoma City were generally steady to $1 higher this week. Prices for medium and large frame #1 steers by weight group were: 450-500# $157.50-$160, 500-550# $145-$159.50, 550-600# $146-$153, 600-650# $135-$158, 650-700# $137.25-$155.75, 700-750# $141.50-$146.50, 750-800# $140-$145, 800-900# $130-$140.85 and 900-1000# $128.50-$135.50/cwt.

The August live cattle futures contract settled at $109.95/cwt today, down 97 cents for the week. October fed cattle settled at $108.07/cwt, down $1.78 from the previous Friday. August feeder cattle futures ended the week at $137.20/cwt, down $2.37 from a week earlier. October feeder cattle closed the week down $2.57 at $134.80/cwt.

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