21 May 2008

2 minute read

North America

Ron Plain

USDA said April placements of cattle into large feed yards (over 1,000 head capacity) were 2.0% lower than the year-ago number. However, the average trade forecast was for April placements to be down 5.6%. So, the drop in placements was smaller than expected. March placements were down 11.4%. The number of cattle placed on feed in the first third of 2008 was down 1.4% compared to January-April 2007.

More fed cattle were marketed than expected last month. The trade forecasted April marketings to be up 8.1%. USDA said marketings of fed cattle from large feed yards during April totaled 2.01 million head, up 10.7% compared to April 2007, due in part to one extra slaughter day. On a daily basis, marketings were up 5.6%. The 2% decline in placements was entirely due to a 16% drop in the number of cattle weighing less than 600 pounds placed on feed during April. The calculated average weight of cattle placed on feed during April was 1% heavier than April 2007.

The average retail price for choice beef during April was $4.172 per pound. That was down 3.3 cents from March and down 11.3 cents from April 2007. Domestic beef demand in 2008 has been weak when compared to last year, especially for higher quality cuts. For example, the average retail price of ground beef in April 2008 was 6.9 cents per pound higher than a year earlier; but the price of choice boneless sirloin steak was 28.3 cents per pound lower this April. High gasoline prices and a slow growing economy are likely reasons for the weakness in meat demand.

Normally fed cattle prices are low during the summer months and rally into the fall. The futures market is currently predicting that fed cattle prices will average above $1 per pound in the fourth quarter of 2008. More months of reduced placements or much stronger beef demand (perhaps due to increased exports) will probably be needed to make the fourth quarter futures correct.

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