Cattle Outlook: Crop report points to declining feed costs

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Crop reports released yesterday point to declining feed prices if weather cooperates this growing season. 97.3 million acres of corn are expected to be planted this spring, the largest acreage number since 1936. The grain stocks report also indicated that corn supplies might not be as tight this summer as previously thought. Pasture quality and availability will continue to be a concern for the coming summer, as improvement in the Southeast is balanced by worsening conditions in Texas.

Cattle placed in feedlots during February were 13.5% below last year’s number, with the March 1 feedlot inventory over 800 thousand head less than March 2012. Beef production thus far in 2013 is already down over 2% despite higher slaughter weights, and more declines appear to be on the way.

The choice boxed beef cutout value has failed in its most recent attempt to eclipse $200/cwt. This is the fifth time in 16 months that the cutout reached $197/cwt. before falling back. Whether the $200 barrier is a psychological factor or not, the industry needs wholesale beef values above that level to generate profitability throughout the production chain in the current cost environment.

Boxed beef cutout values fell this week, with the choice-select spread remaining very tight. On Friday morning, the choice boxed beef carcass cutout value was at $188.90/cwt, down $2.53 from last Friday. The select carcass cutout was at $188.82/cwt, down $3.46 for the week.

Moving in the opposite direction of the cutouts, fed cattle prices rose this week. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $127.76/cwt, up $2.99 from last week and up $2.04/cwt from the same week last year. Steer prices on a dressed basis averaged $203.08/cwt this week, up $5.37 from a week ago and up $1.20 from a year ago.

This week's cattle slaughter totaled 599,000 head, down 2,000 head from last week, and down 3,000 head from a year ago. The average steer dressed weight for the week ending on March 16 was 856 pounds, down 4 pounds from last week and down 14 pounds from just a month ago.

Oklahoma City feeder cattle prices were steady to $3 higher this week with prices for medium and large frame #1 steers: 400-450# $184-$193, 450-500# $165.50-$173, 500-550# $162.50-$175, 550-600# $152.25-$170, 600-650# $142.50-$165, 650-700# $141.25-$145, 700-750# $133-$141.25, 750-800# $135.60-$135.85, 800-900# $120-$135.35, and 900-1000# $121-$123.50/cwt.

Futures markets were closed for Good Friday, but the April live cattle futures contract closed at $128.90/cwt on Thursday, up $2.70 from last Friday. June fed cattle contracts settled at $124.375/cwt. The August fed cattle contract closed at $125.20. April feeder cattle futures ended the trading week at $143.40/cwt, $5.35 higher than last Friday.



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