Cattle Outlook: Cattle on Feed Report Bullish for Market

US - The October cattle on feed report is bullish. USDA says September placements were down 1.9 per cent and marketings were up 5.5 per cent, write Ron Plain and Scott Brown, Ag Economics, MU.
calendar icon 24 October 2016
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Ron Plain
Ron Plain

The on-feed number is up 0.4 per cent compared to last year.

The average price of choice beef in grocery stores during September was $5.868 per pound, down 4.7 cents from the month before, down 36.2 cents from a year ago, and the lowest monthly average since March 2014. All fresh beef at retail averaged $5.77 cents per pound during September.

The 5 area average price of 5 slaughter steers was $105.40/cwt during September, down $12.20 from the month before, down $30.60 from a year ago, and the lowest month since December 2010.

After four weeks of decline, fed cattle prices were slightly higher last week on moderate sales volume. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $98.24/cwt, up 65 cents from last week's average, but down $31.76 from a year ago. This is the second week with live-weight prices under $100/cwt since December 2010. The 5-area dressed steer price averaged $154.02/cwt, up 9 cents from the week before, but down $53.08 from a year ago.

Beef cutout value was lower last week. On Friday morning, the choice boxed beef cutout value was $179.97/cwt, down $2.62 from the previous Friday. The select carcass cutout on Friday morning was $167.58/cwt, down $4.60 from last week. The choice-select price spread was $12.39/cwt, the largest for a Friday morning since July 8.

Last week's cattle slaughter totaled 602,000 head, up 0.2 per cent (1,000 head) from the previous week and up 8.9 per cent from a year ago.

The average steer dressed weight for the week ending on October 8 was 911 pounds, up 2 pounds from the week before, down 17 pounds from a year ago, and below the year-ago level for the 23rd week in a row.

Cattle futures ended the week strongly higher. The October live cattle futures contract settled at $101.15/cwt, up $5.25 for the week. December fed cattle settled at $101.87/cwt, up $4.42 from the previous Friday. February fed cattle futures settled at $102.80/cwt, up $3.425 from the previous Friday. April live cattle closed at $102.07/cwt.

October feeder cattle futures ended the week at $121.87/cwt, up $1.495 from a week earlier. November feeder cattle gained $4.05 this week to settle at $119.70/cwt. The January contract closed the week at $115.50/cwt.

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