Last week was a bit disappointing in the beef and cattle markets, as they seemed poised to improve but ended up struggling in the face of continued weak demand. Some late trade on Friday, however, indicated stronger prices in the fed-cattle market that could carry over this week.
Federally inspected beef slaughter was, however, up slightly from the previous week and nearly 10 percent higher than one year ago. Live weights also were up slightly, resulting in a 10.3 percent year-to-year increase in beef production for the week, according to USDA.
Although slaughter weights on average are running just about a half-percent higher than last year at this time, the Texas Cattle Feeders Association notes that some very heavy cattle shipping to packers are drawing stiff discounts and affecting the overall market. The organization says discounts on overweight cattle – some weighing as much as 1,550 pounds – became a huge issue in the Corn Belt last week as packers enforced discounts up to $20 per hundredweight.
Wholesale beef prices had been posting gains over the past two weeks, but stalled a bit last week, with the Choice cutout averaging $142.83 per hundredweight, compared with $143.67 the prior week and $159 one year ago.
Fed cattle for the week averaged $82.64 per hundredweight for steers and $83.24 for heifers in USDA’s Five-Area Weighted Average, down about $1.80 from the prior week and $16 below the year-ago average.
One piece of good news for beef producers is that corn prices continue to slide, averaging $3.03 per bushel in
Doane’s market outlook this morning calls for cattle futures to run steady to higher. Cash trade is expected to be steady to higher this week after trade developed late on Friday at steady prices around $85. Although boxed-beef prices drifted lower last week, there is some optimism that beef prices will pick up this week if Labor Day weekend beef clearance was decent. Tightening fed cattle supplies should be supportive for the cash market over the next month or two, according to Doane’s.