Weekly US Cattle Outlook - Cattle on Feed Report More Positive

US - Weekly Cattle Outlook, 28th March 2008 - Weekly review of the US cattle industry, written by Glenn Grimes and Ron Plain.
calendar icon 31 March 2008
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Ron Plain
Ron Plain
The March 1 Cattle on Feed report came in a little more positive then the average of the trade estimates.

The number on feed was up 2.2 percent; the trade estimate was for a 2.7 percent increase. Placements on feed during February were up 3.9 percent; the trade estimate was for a 5.3 percent increase. Fed cattle marketing during February were up 3.8 percent; the trade estimate was for a 1.7 percent increase.

The futures market for live cattle responded on Monday with very small declines for the April and June contracts. The remaining contracts were up $0.40 to $0.80 per cwt at the close on Monday.

We still believe the futures market is expecting the cattle industry to shrink quicker than the size of the breeding herd indicates. The contracts after October 2008 are trading near $100 per cwt to nearly $104 per cwt.

The increase in placements of cattle on feed during February was in mid-weights. The number of cattle placed on feed during February weighing less than 600 pounds was up 1.5 percent; the number placed weighing 600-699 pounds was up 15.2 percent; the number placed on feed weighing 700-799 pounds was up 5.5 percent; but the number placed weighing 800 pounds or more was down 4 percent from a year earlier.

Demand for beef at the consumer level for December through February was down 2.8 percent from last year. However, fed cattle demand continued to be positive with a growth of 1.8 percent for these three months compared to a year earlier.

The live fed cattle demand's 4.6 percentage points better than consumer demand was due mostly to larger beef exports and smaller beef imports. For January, net beef imports as a percent of production declined from 8.69 percent in 2007 to 4.32 percent in 2008.

Feeder steers over 600 pounds were steady to $2 per cwt higher, and those under 600 pounds were $2-$4 per cwt higher. Feeder heifers and heifer calves were steady to $2 per cwt higher this week at Oklahoma City compared to last week.

The prices by weight groups for medium and large frame Number One steers at Oklahoma City this week were: 400-500 pounds $125.50-$136.50 per cwt, 500-600 pounds $108-$127.50 per cwt, 600-700 pounds $107.25-$117 per cwt, 700-800 pounds $98-$106 per cwt and 800-900 pounds $91.75-97.75 per cwt.

The weighted average price for live fed cattle for the five-market area through Thursday at $87.97 per cwt was down $1.23 per cwt from a week earlier. The weighted negotiated carcass price for the five-market area at $140.75 per cwt was down $2.65 per cwt from seven days earlier.

Wholesale beef prices this Friday morning showed Choice beef at $138.33 per cwt, down $3.23 per cwt from a week earlier. Select beef at $138.30 per cwt was down $1.24 per cwt from seven days earlier. It looks like fed marketings have not kept current in recent weeks with Select beef discounted only $0.03 per cwt from Choice beef this Friday morning.

Slaughter this week under Federal Inspection was estimated at 619 thousand head, up 1.3 percent from a year earlier.

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