Meat demand depends on people with money to spend. Today’s jobs report is not encouraging. Only 96 thousand jobs were added to the economy during August. That is not enough to keep up with U.S. population growth which is roughly 195,000 per month. The unemployment rate declined to 8.1% because nearly 400 thousand people quit searching for jobs. You are only counted as unemployed if you are actively looking for a job. The labor force participation rate dropped to 63.5%. The last time it was lower was in May of 1979.
Ever since the "pink slime" label was used to describe lean finely textured beef, the value of high fat beef trimmings have been depressed. Prior to this spring, 50% lean trimmings typically sold for 50% of the value of 90% lean trimmings. Since the negative publicity about LFTB, 50% lean trimmings have averaged only 26% of the value of 90% lean trimmings. The negative impact of this controversy is fading slowly if at all.
Beef carcass cutout values were higher this week. On Friday morning, the choice boxed beef carcass cutout value was $190.91/cwt, up $1.05 from last Friday. The select carcass cutout was up $2.40 from the previous week to $181.99/cwt.
Fed cattle prices were higher this week. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $121.80/cwt, up $2.27 from last week and up $5.06/cwt from the same week last year. Steer prices on a dressed basis averaged $189.48/cwt this week, up 72 cents from a week ago, and up $2.69/cwt from a year ago.
Because of the holiday on Monday, cattle slaughter totaled only 551,000 head this week, down 14.0% from last week and down 4.8% from a year ago. The average steer dressed weight for the week ending August 25 was 867 pounds, up 2 pounds from the week before and up 22 pounds from a year ago. That was the 33rd consecutive week above year-earlier. Year-to-date, beef production is down 2.1% compared to 2011.
Because of the Labor Day holiday Oklahoma City did not have a feeder cattle sale on Monday. This week on Missouri markets feeder cattle prices were steady to $5 higher with prices for medium and large frame #1 steers: 400-450# $154.50-$196, 450-500# $149-$172, 500-550# $146-$168, 550-600# $142.50-$165, 600-650# $140-$161.50, 650-700# $138-$159, 700-750# $135-$158.25, 750-800# $137.50-$147.25, 800-900# $125-$145, and 900-1000# $126.75-$135.10/cwt.
The October live cattle futures contract settled at $126.47/cwt, up 45 cents from the previous Friday. December cattle closed at $129.17/cwt, up 52 cents from the previous Friday. February fed cattle contracts settled at $132.67/cwt.
September feeder cattle futures ended the week at $144.30/cwt, 30 cents lower than last Friday. October feeder cattle contracts ended the week at $146.15, down 52 cents from the week before.
Source: Ron Plain and Scott Brown