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CME: Heavy Winter Weather Affecting Beef, Dairy Production

06 January 2016

US - Fed cattle prices saw a significant uptick by almost $10.00 per cwt. for last week, write Steve Meyer and Len Steiner.

The Oklahoma Auction prices will be reported on next week’s summary but we expect some optimism to carry over into the calf and yearling market for now.

The Choice Cutout value also increased an impressive 7 per cent (or by $13.33 per cwt.) although the steer byproduct value was down slightly again along with a slight decrease in the primal rib.

Hog prices were fairly steady to slightly down week-over-week, but some ground was lost on the wholesale side mostly on ham and belly prices.

Other news includes cattle weights that continue to drop. Steer dressed weights are down 2 pounds and cattle dressed weights down 4 pounds from the previous week.

Respectively, those weights are still 8 pounds and 16 pounds above year ago. However with the reports of mud in a lot of feedlots in the Midwest, and the Winter Storm Goliath that swept through NM, OK, and TX, in addition to a seasonal decrease in weights, we should see the weights continuing to drop into the New Year.

With regards to the recent Winter Storm Goliath, so far reports in eastern New Mexico and western Texas have said death loss has been around 30,000 head on the dairy cow side, or a 5per cent death loss rate.

While that number is yet to be determined, another big impact will be lost milk production. Those impacted areas were not able to milk dairy cows for about 2 days, and that will decrease milk production for the lactation cycle of the cow. Probably not enough to noticeably change milk or cheese prices at retail level, but it will be felt by those individual dairies.

Much less news has been reported on feedlot losses, however one source estimated about a 0.1per cent death loss, or around 2500 head of cattle lost in impacted feedlots.

These animals were likely lighter weight Holstein calves and newly arrived Mexican feeder cattle not ready for colder weather. With cattle still missing where the storm came through, that number could change.

Most of the heavy snow and snow drifts occurred south of Lubbock where more of the open pen dairies are, and more normal type winter weather occurred north of Amarillo and in the Texas panhandle - where the majority of feedlots are. Industry called the storm the “40 hour event” with regards to the severe weather.

We expect this to have some impact on cattle weights, look for this to show up in reported dressed weights in the coming weeks.

Although the winter weather is extremely hard on the producers and cattle it affected, it has probably lent some support to the recent uptick in prices on the cash and futures side of the cattle market. To support this confidence in the market, on Monday live and feeder futures opened down likely due to the Chinese stock market crash.

Both the live and feeder contracts closed positive however, feeders up $2.225 and live cattle up $1.275 for the day.

Reports to watch this week include the release of November trade numbers, on a product weight basis from USDA’s Foreign Agricultural Service on 1/6/16 and on a carcass weight basis from USDA’s Economic Research Service on 1/7/16.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

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