USDA's December supply and demand estimates lowered the midpoint of their farm price forecast for the 2013 corn crop by a dime to $4.40 per bushel. They raised their price forecast of soybean meal during the 2013-14 marketing year to $420/ton. USDA raised their forecast of beef production by 0.3% for 2013 and by 0.5% for 2014. They are now predicting 5.7% less beef, but 3.0% more pork and chicken, and 1.4% more turkey in 2014 than this year.
The Food and Drug Administration announced this week that they are "implementing a plan to help phase out the use of medically important antimicrobials in food animals for food production purposes, such as to enhance growth or improve feed efficiency." The FDA's December 11 news release said "Once a manufacturer voluntarily makes these changes, its medically important antimicrobial drugs can no longer be used for production purposes, and their use to treat, control, or prevent diseases in animals will require veterinary oversight." This new policy on antibiotic use should decrease overall industry feed conversion and thus increase feed demand. It should also drive up per head veterinary costs, especially for smaller operations. FDA envisions a three year transition process for this new policy.
Fed cattle prices averaged above $130/cwt for the eighth consecutive week. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $130.16/cwt, down $1.73 from the week before, but up $6.94 from the same week last year. Sales volume was very low and there was no USDA quote for slaughter steer prices on a dressed basis.
This morning, the boxed beef cutout value for choice carcasses was $197.95/cwt, down $4.07 from the previous Friday, but up $3.68 from a year ago. The select carcass cutout was $187.13/cwt, down 55 cents for the week, but up $11.94 from the same day last year.
This week's cattle slaughter totaled 608,000 head, down 3.3% from last week and down 5.1% from the corresponding week last year.
The average steer dressed weight for the week ending on November 30 was 875 pounds, down 4 pounds from the week before and down 1 pound from a year earlier.
Because of a winter storm, Oklahoma City did not have a feeder cattle auction this week.
Fed cattle futures were little changed this week. The December live cattle futures contract closed at $131.87/cwt today compared to $131.42 a week ago. February fed cattle settled at $132.85/cwt and the April contract settled at $133.80/cwt.
The January feeder cattle futures contract ended the week at $167.07/cwt, up from $164.47 a week earlier. March feeders closed at $166.55/cwt.
Source: Ron Plain and Scott Brown