Weekly beef production has been below the five-year average all year, and below last year in all but two weeks, and the probability of it remaining low is supporting beef prices.
USDA data show production last week at 420.5 million pounds, down 41 million, or 8.88%, from the same week a year ago and down 30.7 million, or 6.80%, from the five-year average.
Beef production likely will rise again this week since last week’s action was hampered by the Labor Day holiday weekend, but slaughter rates indicate it will not attain to prior levels.
The USDA’s daily livestock slaughter report shows slaughter through Tuesday at 231,000 head, down 14,000, or 5.71%, from the same period a year ago. Comparisons with last week are not valid because of the holiday-shortened slaughter schedules of most major packing plants.
Going back a week shows weekly slaughter at 518,000 head, down 66,000 head, or 11.3%, from the previous week and down 57,000, or 9.91%, from a year earlier.
HIGHER WEIGHTS MAKE UP SOME LOST SLAUGHTER
It could be argued that rising slaughter weights are making up much of the lost production from reduced slaughter rates. They are making up for some of the lost ground, but not for all of it.
USDA data show that federally inspected steer dressed weights remained in line with last year, which was above the previous five-year average, but began to hold above last year in mid-June. By the third week of August, steer dressed weights were 14 pounds, or 1.62%, above a year ago at 880 pounds. For comparison, they also were 27.4 pounds, or 3.21%, above the previous five-year average of 852.6 pounds.
Federally inspected heifer carcass weights are following a similar path, but the differences are not so great. Heifer dressed weights the third week of August were listed at 798 pounds, up five from the previous week and up eight, or 1.01%, from 790 pounds in the same week a year ago and up 18.4 pounds, or 2.36%, from the previous five-year average.
LIVE CATTLE HIGHER
Live cattle futures are higher overnight as the market tries to catch up with last week’s cash market in which prices jumped about $7 per cwt to mostly $163 from $155 to $156 the previous week.
Overnight action has taken the Oct contract to a new contract high of $161.75, compared with the previous high of $160.75, set on July 28. The action resumes a charge to higher ground after a consolidation pause the last few days just below the contract high.
Moving averages still tilt upward, although the relative-strength index is closing in on overbought conditions. This may give rise to long profit taking and more volatile markets in the near future.
Feedlot showlists this week are up overall, but the gains appear to be concentrated in Kansas with the lists in other feeding states nearly flat or down from last week. The differences may present some bidding problems for packer buyers and keep trading this week at bay until late in the week.
So far, no bids have been reported in the cash markets. Feedlot asking prices range from $167 to $168 on a live basis and around $255 to $260 on a dressed basis.
The USDA reported that boxed beef prices Tuesday were mixed with the choice cutout value at $251.08 per cwt, down $0.31, while the select cutout was up $0.84 at $238.68.
The choice/select spread narrowed Tuesday to $12.40 from $13.55 on Monday, although the weekly spread keeps widening seasonally, and there were 129 loads of fabricated product sold into the spot market.