Cattle Outlook: Ongoing Herd Expansion

February 1, 2016 09:05 AM

By: Ron Plain and Scott Brown, University of Missouri

USDA's January Cattle on Feed report said there were 0.5% fewer cattle on feed than at the start of 2015. In an indication of the pace of herd expansion, the number of steers on feed was up 3.1% and the number of heifers down 7.3% at the start of this year. The number of steers on feed has been above the year ago level for 6 consecutive quarters while heifers on feed have been down for 14 quarters in a row. Only 32.2% of cattle on feed were heifers, the lowest percentage for any January since before my data series on this begins.

USDA's latest Cold Storage report said there were 514 million pounds of beef in cold storage at the end of December. That was 0.6% more than the month before and 15.6% more than a year ago. It was the most frozen beef since the end of April 2012. Stocks of frozen pork were up 8.3% year-over-year and frozen chicken stocks were up 21% compared to December 31, 2014.

This morning the choice boxed beef cutout value was $218.85/cwt, down $6.58 from the previous Friday and down $24.54 from a year ago. The select carcass cutout was $217.33/cwt, down $3.65 from last week and down $19.70 from a year ago.

Despite a lower boxed beef value, fed cattle prices were higher this week. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $131.00/cwt, up $3.38 from last week's average, but down $28.47 from a year ago. The 5 area average dressed price this week for steers was $209.16/cwt, up $7.16 for the week, but down $40.91 compared to the same week last year.

This week's cattle slaughter totaled 567,000 head, down 0.4% from last week and also down 0.4% from a year ago.

The average steer dressed weight for the week ending on January 16 was 898 pounds, down 4 pounds from the week before, but up 16 pounds from a year ago. This was the 83rd consecutive week with weights above the year-ago level.

Prices at the Oklahoma City Stockyards this week were $3 to $6 higher on feeder steers and $5-$10 higher on calves than last week. Prices for medium and large frame #1 steers by weight group were: 400-450# $216-$231, 450-500# $209-$216, 500-550# $188-$205.50, 550-600# $171.50-$194, 600-650# $160-$179, 650-700# $155-$170, 700-750# $150-$168, 750-800# $152-$162, 800-900# $145-$153.50 and 900-1000# $140-$155.50/cwt.

Cattle futures were mixed this week. The February live cattle futures contract settled at $135.30/cwt today, up $3.23 for the week. April fed cattle settled at $134.00/cwt, up 93 cents from the previous week. The June contract ended the week at $123.42/cwt, down 43 cents from the previous Friday.

March feeder cattle ended the week at $157.25/cwt, down 65 cents from a week earlier. April futures lost $1.15 this week to close at $157.90/cwt. May settled at $155.82/cwt.

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