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CME: Steady Increase in Fed Cattle Weights in Early-June

12 August 2019

US - According to Steiner Consulting Group, DLR Division, Inc, fed cattle weights have been steadily increasing since early June but the rate of gain has been in line with normal seasonal patterns and overall carcass weights remain modestly under year ago levels.

The latest weight data released on Thursday pegged the average dressed weight of steers for week ending 27 July at 869 pounds, 3 pounds heavier than the beef before but still 5 pounds or 0.6 percent lighter than a year ago. The average weight of heifers for that week was 800 pounds, 5 pounds heavier than the previous week but still 4 pounds or 0.5 percent lighter than the week before.

The share of steers in the fed cattle mix has been lower than a year ago for some time, which tends to impact the overall weight of fed cattle coming to market. For the latest reported week, steers made up 62.8 percent of the fed cattle mix compared to 64.6 percent a year ago. As a result, the weighted average fed cattle weight for the reference week was 843 lb., 0.7 percent lower than the previous year.

Fed cattle weights reported in the weekly USDA comprehensive cattle report have so far shown to be a very good leading indicator of the official fed cattle data. Based on that report, we would expect fed cattle weights in the next USDA Thursday update to increase by 5-7 pounds.

While weights have been moving higher in the last two months, we have not seen a significant increase in the number of choice grading cattle coming to market. This has significantly impacted the choice-select spread, especially pricing of items for which there is strong retail/foodservice demand, such as ribs.

In early May USDA reported that a little over 70 percent of fed cattle coming to slaughter was grading choice. For the last week of July, that percentage has increased by less than 0.5 percent. Last year we had seen a 2 percent improvement in the number of choice grading cattle during this two month period and in 2017 the May - July improvement in choice grading was around 4 percent.

Fed cattle slaughter during May/Jun/Jul (based on weekly data) was 6.797 million head, about 110,000 head or 1.6 percent lower than a year ago. However, all these additional animals were heifers. Steer slaughter during this period was about 9,000 head lower than a year ago while heifer slaughter increased by 119,000 head.

The shift in the slaughter mix as well as the good marketing rate of the last three months and conditions earlier in the year may have contributed to the decline in the number of choice grading cattle this summer. The supply constraints have come at a time when demand at both retail and foodservice appears to have improved.

A wet/cold spring limited retail features going into Memorial Day. It appears that retailers have shifted some of their promos into the summer months and are gearing up for big Labor Day features as well. Cooler summer temps have certainly helped them in these efforts. At this time the spread between choice-select ribs is as high as $70/cwt compared to $28/cwt a year ago.

The choice-select loin spread was $49/cwt compared to $7/cwt last year and more than double the five year average and As we have noted before, the main contributor to the y/y gains in the value of the cutout recently has been the improvement in middle meat values. Spot supplies remain very light as packers look to fill forward orders. In the four weeks ending 2 August, forward sales for delivery 22-60 days out were 13 percent higher than a year ago.


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


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