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CME: Steer Weights Reported Unchanged for 3 Consecutive Weeks

11 October 2018

US - The number of fed cattle coming to market in the last few weeks has been near or below year ago levels even as the USDA feedlot survey put the 1 September inventory at +5.9 per cent above last year’s levels, reports Steiner Consulting Group, DLR Division, Inc.

The total supply of cattle on feed does not always tell you what to expect in terms of slaughter in the short term, especially if cattle were placed at lighter weights and thus require more time to be market ready.

Still, with large inventories of cattle that have spent more than 150 days on feed, market participants are likely paying close attention to data that can indicate feedlot currentness. Fed steer weights are often viewed as a barometer, albeit an imprecise one.

After all, a 550 pound calf will likely finish at a lower weight than an 850 pound yearling. Still, the weight data is closely scrutinized for any sign that feedlots are falling behind in their marketings and potentially losing bargaining power.

Each week USDA publishes an accounting of carcass weight data for cattle by species. Given the time it takes USDA to tabulate the reports it receives from inspectors in the various federally inspected plants, the data has some time lag to it.

The latest report was issued for the week ending 22 September and it pegged the average steer carcass weight at 896 pounds, slightly lower than the average carcass weight from a year ago. Setting aside the issue of in/out weights for lighter calves, the recent steer carcass weight data would suggest that feedlots remain current.

Steer weights have been reported unchanged for three consecutive weeks, somewhat surprising for this time of year and further offering a sense that weights remain under control. Average heifer weights are running about 0.7 per cent higher than last year but the numbers still appear to be increasing at a normal rate.

We have written this report on 10 October and the question is: what have weights done in the last two weeks? Obviously we will have to wait until the official numbers come out but in the meantime, we can observe weight data as reported in the Mandatory Price Reporting system and come up with some estimates.

There is a strong correlation (although not perfect) between the weight data as reported by MPR and the official statistics. The MPR data shows a somewhat different picture with regard to steer weights, especially in recent weeks.

Mandatory Price Reporting Steer Weights (5-day MA) vs. Actual USDA Steer Weights

Based on it, we would expect a notable increase in reported steer weights for late September and the first two weeks of October, ultimately putting steer weights for the week ending 13 October at around 907 pounds per carcass, 1.2 per cent higher than last year.

Another piece of data to keep in your sights with regard to currentness is the number of grade 4 and grade 5 cattle coming to market. This data set covers only the subset of cattle reported but it may be useful to understand broader trends.

The latest data is for the period 29 July - 25 August and shows 13.5 per cent of cattle graded were grade 4 and grade 5 compared to 12.3 per cent last year. The question is, will we see a continued increase of G4 and G5 cattle in Sep/Oct, further fueling speculation about currentness?

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