US Perspective–30.07.11
30/08/2011
www.themaxfieldreport.com
The severe drought in the southern plains is pushing many cows to slaughter and calves into feed yards. The US Department of Agriculture (USDA) is reporting that over the course of the last five weeks, beef cow slaughter is up by more than 20% compared to a year ago. Meanwhile, USDA’s August cattle-on-feed report said the number of cattle placed on feed during July was up 22.5% from a year ago, the largest for any July since this data series began in 1996. Also worth noting is that the placements of calves weighing less than 600 pounds were up by more than 50%, while the total on-feed number on August 1 was up 7.6% from a year ago and the highest for that date since 2006.
Last month, the average price of choice beef at retail was $4.781 per pound and this is 2.8 cents lower than in June and 9.1 cents lower than in May. Historically, July has the lowest retail beef prices of the summer, while reports claim July’s grocery store prices for beef were 33.7 cents higher than in July 2010 fuelled by reports that domestic demand for beef is slightly above levels of a year-ago. In addition, the amount of beef in cold storage at the end of July was up 7.5% compared to the year before. Frozen stocks of pork, chicken, and turkey were also up.
USDA reports the average live price for slaughter steers in July was $111 per hundredweight, up $2.80 from June and $13 higher than July 2010. Meanwhile, boxed beef prices were lower this week with the choice boxed beef cut-out value at $186.62 per hundredweight, down 24 cents from last week. The select carcass cut-out was down $3.42 from the previous week to $180.42 per hundred pounds of carcass weight. The five-area average price for slaughter steers sold last week on a live weight basis was $112.95 per hundredweight, down $1.09 from last week. Steers sold on a dressed weight basis this week averaged $180.12 per hundredweight, $3.09 lower than the week before.
The average steer dressed weight for the week ending August 13 was 846 pounds, unchanged from the week before, six pounds heavier than for the same week in 2010, and above year-earlier for the thirty-sixth consecutive week. Meanwhile, cash bids for feeder cattle around the country this week ranged from $7 lower to $3 higher than the week before, while auction prices in Oklahoma City were $2 to $6 lower.
The August fed cattle futures contract ended the week at $114.30 per hundredweight, the same as last week’s close. October lost 30 cents to end the week at $115.20 per hundredweight. December live cattle settled at $117.10 per hundredweight, down 22 cents from the previous Friday.
There are quite a few members of the trade travelling Asia prior to the start of the All China Leather Exhibition. Tanners in the meantime, speculate a number of these travellers have hides for sale for relatively prompt shipment and, with other members of the trade with hides for sale departing throughout the course of this week, there is really no sense of urgency for buyers unless they are desperate for hides. In the meantime, we have heard reports throughout the summer insisting that tanners were short of raw material and we look forward to reports from those who will travel before the show if these comments are indeed correct or not. Meanwhile, it will also be interesting to hear comments from those travelling as to their perception of tanners’ outstanding leather orders in order for the trade to piece together what we can expect for demand for the remainder of the calendar year.
Looking ahead to this week, we suspect many producers will not officially offer to the trade in order to protect staff travelling, while it will be interesting to see how those major producers who will not travel Asia will move forward this week. Overall, we remain of the opinion that sellers will face a softer tone and that we are likely to see lower prices.
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