Cattle Outlook: Good indication herd expansion is starting

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The April cattle on feed survey said there were 2.2% more steers on feed at the start of April than a year ago, but 5.9% fewer heifers in feedlots. The increase in steer numbers is driven by lower corn prices and record fed cattle prices. The decline in heifers is likely due to increased heifer retention. In total, heifers made up 34.2% of the cattle in large feed yards. That was the smallest share for any April since 2006. That is a good indication that herd expansion is starting.

An even better indication of herd expansion is cattle slaughter. Through April 19, steer slaughter was down 1.5% which is in line with the decline in past calf crops. The 2013 calf crop was 1.0% smaller than the year before and the 2012 calf crop was 2.9% smaller than in 2011. It is a different story for female slaughter. During that same period, cow slaughter was down 9.5% and heifer slaughter was down 7.2% compared to the first 16 weeks of 2013. In total, female slaughter was down 8.1%. Why the sharp decline in female slaughter? Record feeder cattle prices have switched the mentality from herd reduction to herd growth. Total cattle slaughter was down 4.7% during the first 16 weeks of the year which is a big part of why prices are so high.

Fed cattle sales volume was very light again this week. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $147.79/cwt, up $1.11 from last week's average and up $18.77 from a year ago. The 5 area average dressed price for steers was $236.38/cwt, up 38 cents for the week and up $29.83 from the same week last year.

Boxed beef prices were lower this week. This morning the boxed beef cutout value for choice carcasses was $229.24/cwt, down $3.83 from the previous Friday. The select carcass cutout is $218.26/cwt, down $3.82 from last week.

This week's cattle slaughter totaled 608,000 head, up 3.9% from the previous week, but down 2.3% from the corresponding week last year. The average steer dressed weight for the week ending on April 19 was 844 pounds, down 6 pounds from the week before and the same as a year earlier.

Feeder cattle prices at this week's Oklahoma City auction were mostly steady to $5 higher. This week's prices for medium and large frame #1 steers by weight were: 400-450# $214-$251, 450-500# $222-$244, 500-550# $200-$237, 550-600# $202-$221, 600-650# $192.50-$213.50, 650-700# $185-$209, 700-750# $174-$192.50, 750-800# $174.75-$181.50, 800-900# $165-$178.50, and 900-1000# $159-$169.50/cwt.

Cattle futures were higher this week. The June live cattle futures contract closed at $138.05/cwt today, up $1.28 from last week's close. August fed cattle settled at $137.35, up $1.75 for the week. October settled at $141.72/cwt, up $2.05 from the previous Friday. December cattle closed at $144.17/cwt. The May feeder cattle contract ended the week at $183.50/cwt, up $3.50 for the week. August feeders closed at $190.32/cwt.

Source: University of Missouri-Cattle Outlook



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