CATTLE OUTLOOK – January 15, 2016

CATTLE OUTLOOK – Ron Plain and Scott Brown

Ag Economics, MU   January 15, 2016

The stock market is off to a dismal start in 2016.  Hopefully, this

isn’t a sign of a weakening economy.  Export demand for U.S. beef has

been below the year ago level each month since April.  Domestic beef

demand was down in November for the first time this year.

Fed cattle prices were mixed this week.  Through Thursday, the 5-area

average price for slaughter steers sold on a live weight basis was

$133.52/cwt, up $1.68 from last week’s average, but down $29.62 from a

year ago.  The 5 area average dressed price this week for steers was

$209.57/cwt, down 45 cents for the week and down $53.93 compared to

the same week last year.

This morning the choice boxed beef cutout value was $232.65/cwt, up

$1.42 from the previous Friday, but down $28.48 from a year ago.  The

select carcass cutout was $227.63/cwt, up $3.04 from last week.

Beef packer margins were terrible in 2011-2014.  This led to the

closing of several large packing plants.  It looks like we are at the

end of these plant closings.  Beef packer margins have rebounded in

recent months.

Highly pathogenic avian influenza has been found in an Indiana turkey

flock.  It is a different strain than the AI that caused problems last

winter.

Based on preliminary data, the average dressed weight of steers

slaughtered in 2015 was 892.1 pounds.  That is more than 19 pounds

heavier than last year and is record high for the fourth consecutive

year.  What happens with slaughter weights will have an impact on just

how big the increase in 2016 beef production will be.

This week’s cattle slaughter totaled 568,000 head, up 3.3% from last

week and up 3.3% from a year ago.

The average steer dressed weight for the week ending on January 2 was

904 pounds, down 2 pounds from the week before, but up 7 pounds from a

year ago.  This was the 81st consecutive week with weights above the

year-ago level.

Feeder cattle prices at the Oklahoma City Stockyards this week were $5

to $10 lower than last week.  Calf prices were $2 to $4 higher.

Prices for medium and large frame #1 steers by weight group were:

400-450# $224-$231, 450-500# $210-$226, 500-550# $186-$206, 550-600#

$182-$199, 600-650# $160-$189.25, 650-700# $159.50-$169, 700-750#

$153.50-$168.25, 750-800# $154-$164, 800-900# $141.50-$157 and

900-1000# $145-$156/cwt.

Cattle futures were lower this week.  The February live cattle futures

contract settled at $127.55/cwt today, down $5.33 for the week.  April

fed cattle settled at $128.50/cwt, down $5.32 from the previous week.

The June contract ended the week at $119.75/cwt, off $4.53 from the

previous Friday.

January feeder cattle ended the week at $154.30/cwt, down $5.13 from a

week earlier.  March futures lost $7.05 this week to close at

$150.27/cwt.  The April contract settled at $150.85/cwt.