Cattle Outlook: Boxed beef lower for 9th week in a row

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USDA's July report said the number of cattle on feed at the start of the month was down 3.2%. The number was below year-ago for the 11th consecutive month. The average placement weight during June was up. The number placed weighing less than 700 pounds was down 29.9% and the number placed weighing more than 700 pounds was up 17.6% compared to July 2012. The number of steers on feed at the start of July was down 3.1% from a year earlier. Heifers on feed were down 3.5%. Heifers as a percent of cattle on feed were the lowest of any July since 2006. This may be a sign that producers are edging toward herd expansion.

There were 480.625 million pounds of beef in cold storage at the end of June. That was down 0.4% from the month before, up 2.5% from a year ago, and the lowest amount for any month since December.

Crop growing conditions are much better than a year ago. As of July 21, 63% of corn acres were rated in good or excellent condition. That is down 3 percentage points from the week before, but up 37 points from a year ago. 28% of U.S. pastures were rated in poor or very poor condition on July 21, down from 55% poor or very poor a year ago.

Fed cattle prices were mixed this week. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $119.60/cwt, down $1.11 from last week, but up $5.67 from the same week last year. Steer prices on a dressed basis averaged $191.51/cwt this week, up 51 cents from a week ago and up $11.38 from a year ago.

This morning, the boxed beef cutout value for choice carcasses was $187.01/cwt, down $2.50 from the previous Friday, but up $9.84 from a year ago. This was the ninth consecutive week with lower choice cutout. The select carcass cutout is at $182.88/cwt, down $1.44 for the week. The choice-select price spread dropped $1.06 this week to $4.13/cwt.

This week's cattle slaughter totaled 641,000 head, down 1.5% from last week, but up 1.1% from a year ago. The average steer dressed weight for the week ending on July 13 was 862 pounds, up 2 pounds from the week before and also up 2 pounds from a year ago.

Oklahoma City feeder cattle auction prices this week were steady to $3 lower for steers and steady to $3 higher for heifers with prices for medium and large frame #1 steers: 400-450# $181.50, 450-500# $163.50-$183.50, 500-550# $167-$185, 550-600# $157-$174, 600-650# $144-$163, 650-700# $139-$153.50, 700-750# $138-$154.25, 750-800# $135.50-$149, 800-900# $131.25-$145.10, and 900-1000# $127-$135/cwt.

The August live cattle futures contract closed at $121.80/cwt today, down 17 cents from last week's close. The October fed cattle contract lost 37 cents from last Friday to settle at $125.85/cwt. August feeder cattle futures settled at $152.60/cwt, up 35 cents for the week.

Source: Ron Plain and Scott Brown

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