The bulls are grazing

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Source: John Michael Riley, Asst. Extension Professor, Department of Agricultural Economics, Mississippi State University

Friday’s USDA Cattle on Feed report coupled with news that Japan will be relaxing their restrictions for beef imported from the United States has the market bulls clamoring. The latter had been floating around with no certain time frame known.  This potential increase in export demand has added fuel to a fire that was started by Friday’s on feed report, which indicated tighter fed cattle supplies than market analysts had expected.

The on feed report revealed that 11.193 million head of cattle were in feedlots with 1,000 head capacity or greater on January 1.  This was a 5.6% decline from January 2012 and 3.0% below the five-year average from 2008 to 2012.  Pre-report expectations were looking for a 4.4% drop from the previous year and the 5.6% drop was just inside the low end of the range.  Table 1 provides a summary of the report.

Placements during December were 0.5% lower than December 2011 and 0.2% below the five-year average at 1.664 million head.  This number was below expectations of a 4.1% increase.  The over assessment by analysts likely stemmed from increased placements in major feeding locations, which often act as a barometer for the rest of the nation.  In Kansas, Nebraska, Oklahoma and Texas total reported placements were higher compared to the previous year (see table 2).  Nationally, lightweight placements (under 600 pounds) were much lower, down 10% from December 2011. Offsetting this, and bringing the total placement number up, was mid-weight 600-699 and 700-799 pound placements, respectively, up 7.8% and 5.3% across the U.S compared to the same month in 2011.  Heavy weight placements (over 800 pounds) were mostly steady in December.

Marketings in December, though 1.7% lower than last year, fared better than expected.  The average of pre-report analysts had marketings pegged at 6.8% lower than a year ago and the highest guess was looking for a 5% drop.  When compared to the 2008-2012 average marketings were 0.5% higher.

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The Markets

Cash fed prices were mixed this week.  The 5-area live fed steer price averaged $122.60 per hundredweight, down $1.33 from the previous week, while the average price on a dressed basis improved 84 cents to $198.03 per hundredweight.  Wholesale boxed beef prices were lower this week with Choice carcasses taking the brunt of the blow, dropping $3.73 per hundredweight compared to last week, while Select dropped $1.86 per hundredweight. Choice finished with a weekly average of $188.96 per hundredweight and Select finished at $182.71.  Oklahoma calf and feeder prices dropped last week, down $0.81 per hundredweight and $2.76 per hundredweight, respectively. Corn prices held mostly steady losing 2 cents per bushel to close at $7.46 in Omaha.

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