Monday, June 1, 2015

Cattle Outlook

CATTLE OUTLOOK - Ron Plain and Scott Brown
    Ag Economics, MU   May 29, 2015

The same moisture that is slowing down corn planting in a handful of
states (Missouri, Nebraska, Kansas, Colorado and Texas all trail their
recent 5-year average planting rate) is contributing to good pasture
conditions in important beef cow producing areas. 71% of pasture was
rated in good or excellent condition in Texas for the week ending May
24, similar to the previous week and higher than any other weekly
reading since September 2007. Oklahoma pastures were 63% good or
excellent, highest since August 2010. Beef cow herd expansion will
continue in earnest with conditions such as these.

Today’s release of the May survey of U.S. consumers by the University
of Michigan indicated a drop in consumer sentiment of 5.4% relative to
April, though the index is still 10.7% above the year ago level. For
the first five months of the year the consumer sentiment index is
averaging a level higher than any year since 2004. The Restaurant
Performance Index was at 102.7 in April, the 26th consecutive month
with a reading indicating expansion for the restaurant industry.

On the international front, U.S. dollar strength continues to
constrain exports. The trade-weighted dollar index against major
currencies has grown again recently, and though it remains below the
levels of March and early April, it is still at a higher level than
any other time since 2003. Monthly meat export data through April will
be released next week.

Fed cattle prices fell for the second week in a row. Through Thursday,
the 5-area average price for slaughter steers sold on a live weight
basis was $158.49/cwt, down $1.49 from last week but still up $14.33
from a year ago. The 5 area average dressed price for steers retreated
$1.95 this week to $249.71/cwt. This remains $18.95 higher than last
year’s dressed price average.

Boxed beef cutout values also declined this week. The cutout value for
choice carcasses this morning was $255.11/cwt, down $5.69 from last
Friday but up $21.79 from a year ago. The select cutout was
$243.57/cwt, resulting in a choice-select spread of $11.54/cwt, down
from $12.80/cwt last week.

Cattle slaughter totaled 525 thousand head this holiday-shortened
week, down 2.8% from the same week last year. Year to date cattle
slaughter trails 2014 by 7.0%. The average dressed weight for steers
slaughtered the week ending May 16 was 867 pounds, down 3 pounds from
last week but 27 pounds heavier than the same week last year.

There was no feeder cattle sale this week at Oklahoma City due to the
Memorial Day holiday.

The June live cattle futures contract closed at $152.50/cwt today, up
38 cents for the week. August fed cattle settled at $151.52/cwt and
October at $153.10. The August feeder cattle contract jumped $4.02 on
the week to end at $223.02/cwt.

July corn closed today at $3.515/bu, down 8.5 cents from last Friday.

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