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CME: Drop in Slaughter Cow Prices in W1 of August

13 August 2018

US - Steiner Consulting Group, DLR Division, Inc. reports that according to USDA-Agriculture Marketing Service (AMS), slaughter cow prices in the first week in August dropped below $50 per cwt.

This was the lowest price since December 2009. The supply side of this market is the issue as cow slaughter during the four weeks of July was up 9 per cent from a year ago. This was a slight acceleration from the first half of the year when cow slaughter was up 8 per cent. This year, cow slaughter is expected to breach the 6 million head mark for the first time since 2013 and is on track to be up 15- 20 per cent from 2015.

Beef cow slaughter during the first four weeks of the summer quarter was up 16 per cent from a year ago while dairy cow slaughter was up 3 per cent. Cow harvest in the latest reported week (28 July) was up 12 per cent from a year earlier. In that week, beef cow slaughter was up 18 per cent and dairy cow slaughter was up 6 per cent, so there is not much evidence to suggest moderation in pace of increased cow beef production.

Normally, there is a decline in cow slaughter from mid- July to mid-August. Beef cow slaughter did decline 3,600 head from the prior week in the latest reported week. Dairy cow slaughter, however, increased 2,100 head from the prior week compared to an 1,800 head decline in the same week a year ago. This would be consistent with the dairy cow herd holding steady instead of adding a few thousand head to the herd as the dairy industry did a year ago.

The demand for cow beef has been stable this year, albeit at lower values than a year ago due to the larger domestic supply. Inventories of boneless beef in cold storage at mid-year were up 6 per cent from a year earlier.

Given the increase in cow slaughter, the increase in frozen inventory is not worrisome. Beef imports, which are mostly in the form of beef trim that would compete with cow beef, were up less than a percent from a year ago during the first half of the year, and imports during the second quarter were down from a year ago.

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

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