Cattle Outlook: High feed costs explain fewer cattle on feed

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The September cattle on feed report said the number of cattle on feed in large feedlots at the start of September was down 0.6% compared to September 2011. The pre-release trade prediction was for it to be down 0.1%. This is only the second time the number of cattle on feed has been below year-ago in the last 28 months.

USDA said August placements of cattle into large feed yards (over 1,000 head capacity) were 10.9% lower than in August 2011. The decline in placements can be attributed to record high feed costs. August placements were the smallest for any August since 2005.

USDA said marketings of fed cattle from large feed yards during August totaled 1.96 million head. That is down 4.5% compared to August 2011. August steer and heifer slaughter was down 2.5%. The calculated average weight of cattle placed on feed during August was 2.2% heavier than in August 2011.

Beef carcass cutout values were lower this week. On Friday morning, the choice boxed beef carcass cutout value was $189.30/cwt, down $4.58 from last Friday, but up $6.89 from a year ago. This week the select carcass cutout was down $2.94 from the previous week to $178.25/cwt.

Fed cattle prices were lower this week. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $122.46/cwt, down $2.83 from last week, but up $6.23 from the same week last year. Steer prices on a dressed basis averaged $190.99/cwt this week, down $4.03 from a week ago, but up $5.99 from a year ago.

Cattle slaughter totaled 651,000 head this week, up 4.0% from the week before, but down 4.1% from the same week last year. The average steer dressed weight for the week ending September 15 was 869 pounds, down 1 pound from the week before, but up 16 pounds from a year ago. This was the 36th consecutive week steer weights have been above the year-earlier level.

Oklahoma City stocker cattle prices were $2 to $4 $5 lower this week. Feeder cattle prices were called steady to $2 higher. Prices for medium and large frame #1 steers: 400-450# $151-$194, 450-500# $144-$176.50, 500-550# $146.50-$170, 550-600# $144-$155.25, 600-650# $140-$158, 650-700# $137.50-$151, 700-750# $138-$149.75, 750-800# $138-$151, 800-900# $134-$139.50, and 900-1000# $135/cwt.

The October live cattle futures contract settled at $122.07/cwt, down $3.45 from the previous Friday. December cattle closed at $124.70/cwt, down $3.77 for the week. February fed cattle contracts settled at $128.42/cwt.

October feeder cattle futures ended the week at $143.80/cwt, $3.42 lower than last Friday. November feeder cattle contracts ended the week at $144.35, down $4.35 from the week before. January feeders settled at $147.35/cwt.

Corn futures were up the 40 cent limit today due to a lower-than-expected September stocks report.

Source: Ron Plain and Scott Brown



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