Fed cattle gained about a dollar in the live market last week, but a look at proportional losses across the production chain shows cattle feeders taking more than their share.
The Texas Cattle Feeders Association notes that live-cattle prices last week were down about 18 percent compared with one year earlier. At the same time, Wholesale beef prices were down about 14 percent from last year. Retail beef prices year to date have run about 4 percent below last year, and consumer per-capita spending on beef is down about 7 percent.
A new report on meat price spreads from USDA’s Economic Research Service also illustrates this trend, showing farmers’ share of overall beef prices declining from over 48 percent in 2003 to about 43 percent during the second quarter of this year.
Feeding margins lost about $16 per head last week in our Sterling Beef Profit Tracker, but remain positive at $8.91 per head. Packers are nearing breakeven according to the index, with losses averaging $4.20 per head.
Last week’s slaughter numbers reported by USDA were down slightly from the week before, as were slaughter weights and beef production. The weekly average price for Choice boxed beef was down 27 cents from the previous week, at $141.22 per hundredweight. Fed cattle averaged $82 per hundredweight last week, up about $1 from the week before. CME live-cattle futures also gained a little ground last week, with the August contract finishing the week at $84.65, October at $88.55 and December at $88.05. CME feeder-cattle contracts finished the week up slightly, with August, October and December each holding just above $100.
One trend that has helped cattle feeders in recent weeks is an improvement in hide and offal values, which averaged $9.03 per hundredweight last week, up nearly 5 percent from the prior week. By-product values remain below the year-ago average of $11.74, but have been gaining ground since bottoming out around $6 in early spring, as demand for leather and tallow improve internationally.