Cattle Outlook: Choice cutout falls for sixth consecutive week

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The U.S. unemployment rate held steady at 7.6% in June. The number of jobs increased, but there was a trade-off between part-time and full-time jobs. The seasonally adjusted number of people working part-time increased by 360,000 in June; the number working full-time jobs declined by 240,000.

Crop growing conditions are much better than a year ago. As of June 30, 67% of corn acres were rated in good or excellent condition. That is up 2 percentage points from the week before and up 19 points from a year ago. 25% of U.S. pastures were rated in poor or very poor condition on June 30, down from 43% 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 $119.58/cwt, down $1.24 from last week, but up $2.53 from the same week last year. Steer prices on a dressed basis averaged $192.59/cwt this week, up 59 cents from a week ago and up $4.92 from a year ago.

Friday, the boxed beef cutout value for choice carcasses was $196.63/cwt, down 89 cents from the previous Friday, but up $2.83 from a year ago. This was the sixth consecutive week with lower choice cutout. The select carcass cutout is at $188.02/cwt, up 76 cents for the week. The choice-select price spread dropped $1.65 this week to $8.61/cwt, the lowest since April.

This week's cattle slaughter totaled 559,000 head, down 14.3% from last week (due to the Independence Day Holiday) and down 2.8% from a year ago. The average steer dressed weight for the week ending on June 22 was 854 pounds, up 1 pound from the week before and up 1 pound from a year ago. Year-to-date cattle slaughter is down 1.5%; beef production is down 1.0%.

Oklahoma City feeder cattle auction prices this week were $3 to $5 higher with prices for medium and large frame #1 steers: 450-500# $174, 500-550# $163-$175.50, 550-600# $154.25-$170.50, 600-650# $138.50-$161, 650-700# $139.50-$154, 700-750# $136.50-$149.25, 750-800# $141-$149, 800-900# $133.75-$146.75, and 900-1000# $122.50-$131/cwt.

The August live cattle futures contract closed at $121.95/cwt today, down 7 cents from last week's close. The October fed cattle contract gained 58 cents from last Friday to settle at $126.25/cwt. December ended the week at $128.10/cwt.

August feeder cattle futures settled at $151.80/cwt, up $2.35 for the week. The September contract gained $2.57 from last Friday to close at $154.17/cwt. October settled at $155.77/cwt.

Corn prices are expected to plummet as we approach harvest season. The July corn futures contract ended the week at $6.85/bushel. The September contract ended the week at $5.26 and December corn settled at $4.91.

Source: Ron Plain and Scott Brown



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