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.