US Perspective - 28.02.12
Courtesy of The Maxfield Report
www.themaxfieldreport.com
Frankly, there is no reason for sellers to succumb to lower ideas of buyers. Meanwhile, continued reports of sellers who are well behind in shipments and this will only going to lend support for a firm market.
Grocery store beef prices during January were record high for the fifth month in a row, as retail choice prices averaged $5.093 per pound last month, up 7.7 cents from December and up 55.1 cents from January 2011. Beef prices were above year-ago for the 23rd consecutive month. The 5-area live weight average price for fed steers was $123.10 per hundredweight in January, up $2.10 from December and up $17 from January 2011. Only November 2011 had a higher slaughter cattle price than January.
The beef cutout value, for both choice and select carcasses, reached new record highs this week, with the choice cutout value at $197.26 per hundredweight, up $7.04 from last week. The select carcass cutout was up $7.98 from the previous Friday to $193.41 per hundred pounds of carcass weight. The choice-select spread has dropped $7 since the start of the year.
Fed cattle prices were slightly below the record highs this week in light volume with the 5-area average price for slaughter steers sold on a live weight basis was $126.47 per hundredweight, up $4.10 from last week and $15.47 per hundredweight above the same week last year. Steer prices on a dressed basis averaged $201.14 per hundredweight this week, up $5.30 from a week ago and up $21.39 year ago.
This week’s cattle slaughter totalled 592,000 head, down 3.9% from the week before and down 9.6% compared to a year ago. The average dressed weight for slaughter steers for the week ending on February 11 was 855 pounds, down 5 pounds from the week before and up 20 pounds from a year earlier. Year-to-date beef production is down 5.3%.
Feeder cattle prices were between steady and $8 higher at most auctions across the country this week. Oklahoma City prices were $2 to $5 higher on feeder cattle. The February live cattle futures contract settled at $127.55 per hundredweight today, down $1.05 compared to last Friday. The April contract closed at $129.50 per hundredweight, down $1.40 for the week. June fed cattle settled at $127.75 and August at $130.20 per hundredweight.
The slaughter
Last week’s cow slaughter at 127,000 is two thousand head higher than the week prior, while it is seven thousand head lower than the same week last year. Year-to-date the slaughter stands at 1,076,000 head which is five thousand head higher than last year’s pace.
Trading volumes were light in all regions on Friday. In the north cattle traded at $201 in the beef and $127 live both off $2 from last week. In the South, a few cattle traded at $129 and other scattered prices in between. The light trade will be important in establishing market direction this week. With carcass weights rising, counter seasonally.
Meanwhile the numbers of cattle on the show lists will be the determinative factor in discovered a price this week. Beginning asking prices will be back at $131. Worth noting is that last Friday’s Cattle on Feed Report was considered mildly bullish with slightly smaller placements and slightly larger marketing numbers than expected. In addition, following a sharp run up in box prices, buyers took a breather and prices levelled at week’s end.
Slaughter numbers this past week are 596,000 following 616,000 and 603,000 and we look for 610,000 head this week. Worth noting is that all have generated higher box prices. The choice cut out was at $197 and select at $193. This past week’s advance in box prices represents the largest of the New Year and puts processor margins on the road to recovery.
The supply of replacement cattle will be front and centre. Thin-fleshed lighter weights posted the full advance in recent prices. Feedlots are growing more cautious regarding warmed up offerings. Fleshy feeder cattle sold up to $10 lower than thinner fleshed feeders of the same weight, while a 750-pound feeder steer was selling for $160 on the south plains.
Corn prices worked lower in overnight trading late Sunday. Corn now has established a trading range between $6.25 and $6.50. Wheat prices continue to dangle in front of cattle feeders as a competitive grain for feeding. The basis in Guymon Oklahoma is $0.80 over December contract. Corn is now pricing into most rations at $12.60 per hundredweight.
