Cattle Outlook: Beef prices reach 2nd highest ever

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The average price of choice beef at retail during February was $5.045 per pound, down 4.8 cents from the month before, but up 42.7 cents from a year ago. February's average beef price was the second highest ever. The last time beef prices were below year-ago was February 2010.

The farm-to-wholesale beef price spread is closely correlated with packer margins. During February the farm-to-wholesale price spread was down 2.4 cents from January, down 11.2 cents from a year ago, and the lowest since March 1999. Beef packer margins are terrible.

Slaughter steers in the 5-area report averaged $125.70/cwt last month, up $2.60 from January and up $17.10 from February 2011.

USDA says there were 466 million pounds of beef in cold storage at the end of February. That is down 3.9% from the month before but up 1.4% from a year ago.

Fed cattle prices were steady this week with good sales volume. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $126.58/cwt, up 24 cents from last week and up $12.33/cwt from the same week last year. Steer prices on a dressed basis averaged $203.14/cwt this week, up 91 cents from a week ago and up $15.63 from a year ago.

Beef cutout value was lower this week. On Friday morning, the choice boxed beef carcass cutout value was $188.40/cwt, down $1.52 from last week. The select carcass cutout was down $1.38 from the previous Friday to $186.56 per hundred pounds of carcass weight. The choice-select price spread is only $1.84/cwt. Steer dressed prices are $14/cwt above the choice cutout value.

This week's cattle slaughter totaled 605,000 head, down 2.3% from the week before and down 4.4% from a year ago. The average dressed weight for slaughter steers for the week ending on March 10 was 848 pounds, down 2 pounds from the week before, but up 19 pounds from a year earlier. Weights have been above year-earlier for nine straight weeks. Year-to-date beef production is down 3.5%.

Feeder cattle prices this week were generally steady with more auctions higher than lower. Oklahoma City prices were mostly steady to $2 higher with the ranges for medium and large frame #1 steers: 400-450# $212.50-$219, 450-500# $200-$217, 500-550# $186-$203, 550-600# $180-$194, 600-650# $172-$191, 650-700# $165-$175, 700-750# $155-$166, 750-800# $147.75-$156.50, 800-900# $140-$156.50, and 900-1000# $135.25-$141.25/cwt.

The April live cattle futures contract settled at $124.0/cwt today, down 80 cents compared to last Friday. The June contract closed at $121.10/cwt, down $1.60 for the week. August fed cattle settled at $123.20 and October at $128.37/cwt. April feeder cattle futures lost $1.88 this week to settle at $152.42/cwt.

Source: Ron Plain

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