Ron Plain’s cattle report
The trade has been expecting a drop in the number of cattle being placed on feed. After all, USDA says the 2010 calf crop was smaller than the year before for the 15th consecutive year. Yet, USDA's May Cattle on Feed report said the number of cattle placed on feed during April was up 9.9%. During the first third of 2011 placements into feed yards were up 4.1% compared to January-April 2010 and the highest total for these four months since 2003. The number of cattle placed on feed in 2010 was up 5.3% compared to 2009. Bigger placements from a smaller calf crop? Part of the discrepancy is due to increased imports of feeder cattle from Mexico. Placements of U.S. born cattle were up 4.6% in 2010 and up 3.0% in the first four months of 2011. We have probably pulled ahead on placements, especially this spring given the drought in the Southern Plains. But, one has to wonder if recent calf crops were larger than originally estimated.
It looks like the U.S. Country of Origin Labeling law (COOL) may not survive legal challenges from Canada and Mexico. Sources indicate the World Trade Organization (WTO) will be issuing a ruling against COOL later this year. COOL went into effect in the spring of 2009.
Fed cattle prices are lower for the fifth week in a row. The 5-area daily weighted average price for slaughter steers sold through Thursday of this week on a live weight basis was $105.11/cwt, down $3.26 from last week. Steers sold on a dressed weight basis this week averaged $170.56/cwt, $6.19 lower than the week before. This week in 2010 the average 5-area live price for steers was $93.64/cwt and the carcass price was $151.04/cwt.
Boxed beef prices are slightly higher this week. Friday morning the choice boxed beef carcass cutout value was $177.30/cwt, up $2.22 from last week. The select carcass cutout was up 70 cents from the previous Friday to $172.16 per hundred pounds of carcass weight. It appears packer margins could support a bit higher fed cattle price.
This week's cattle slaughter totaled 672,000 head, up 2.8% from the week before, but down 0.6% compared to the same week last year. The average steer dressed weight for the week ending May 14 was 822 pounds, up 6 pound from the week before and 15 pounds heavier than for the same week in 2010.
Cash bids for feeder cattle around the country this week were steady at best and mostly $2 to $6 lower than last week. Oklahoma City prices were $5 to $8 lower on stocker cattle and $5 to $10 lower on feeder cattle with price ranges for medium and large frame #1 steers: 400-450# $141-$156, 450-500# $137-$142, 500-550# $139.50-$144.50, 550-600# $135-$142, 600-650# $117-$129.50, 650-700# $117-$127.75, 700-750# $124-$127.25, 750-800# $119-$121.50, 800-900# $112-$118.50 and 900-1000# $109.50-$113.50/cwt.
The June fed cattle futures contract ended the week at $104.10/cwt, down 87 cents from last week's close.