Cattle Outlook: Cattle inventory, slaughter total fall lower

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National Beef Packing Company announced today that they will be closing their beef processing facility in Brawley, California in early April. The closure is the result of tight margins due to declining cattle numbers. The plant employs 1,300 workers.

USDA's January cattle inventory survey said there were 87.73 million cattle in the U.S. at the start of 2014. That is down 1.8% from a year ago and a bit lower than the average of trade forecasts. The 2013 calf crop totaled 33.93 million head, down 1.0% compared to 2012 and down for the 18th consecutive year. The calf crop was 1.1% larger than the trade predicted.

For the first week this year, fed cattle prices did not set a new record high. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $145.80/cwt, down $2.45 from a week ago, but up $20.84 from a year ago. There was no price report for steer prices on a dressed weight basis.

This morning, the boxed beef cutout value for choice carcasses was $227.97/cwt, down $10.30 from the previous Friday, but up $43.98 from a year ago. The select carcass cutout is $228.58/cwt, down $8.64 for the week, but up $49.02 from last year. The select cutout is now above the choice cutout for the first time since March 22, 2013.

USDA's January cattle on feed report said the number of steers on feed was down 3.8% compared to January 1, 2013 and the number of heifers was down 8.3%. The bigger drop for heifers is an indication of planned herd expansion. Heifers were only 35.2% of the cattle in feed yards at the start of 2014. That is the lowest percent for any January since 2006.

This week's cattle slaughter totaled 566,000 head, down 5.2% from last week and down 8.6% from the corresponding week last year.

The average steer dressed weight for the week ending on January 18 was 870 pounds, down 1 pound from the week before and down 1 pound from a year earlier.

Feeder cattle prices at this week's Oklahoma City auction were steady to $1 lower than the week before. This week's prices for medium and large frame #1 steers by weight were: 400-450# $220-$229, 450-500# $212-$228, 500-550# $201-$226.50, 550-600# $186.50-$200, 600-650# $174-$188.50, 650-700# $170-$183, 700-750# $161.50-$174, 750-800# $161.75-$167, 800-900# $155-$165.25, and 900-1000# $153-$158.50/cwt.

The February live cattle futures contract closed at $141.67/cwt today, down $1.73 from last week's close. April fed cattle settled at $140.42, up 32 cents for the week. June settled at $131.50/cwt, down 62 cents.

The March feeder cattle futures contract ended the week at $169.42/cwt, up 55 cents for the week. May feeders closed at $168.87/cwt.

Source: Ron Plain and Scott Brown



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