Strong beef demand has been a key in 2018 and will be critical as higher beef production carries over into 2019, said Derrell Peel, Oklahoma State University Extension Livestock Specialist in a letter to Extension agents.
Beef production this year is up 2.7% because of higher slaughter and carcass weight increases. In the past six weeks, production has been 1.6% higher, but despite continued supply pressure, wholesale prices over the period have averaged 4.4% higher than the same period last year.
Boxed beef cutout prices have increased from a recent low near $202 per cwt in mid-October to a high last week of more than $218.
The beef rally has been led by middle meats, with the strongest increases in ribs and loins as well as briskets, but chucks and rounds also have increased in the last six weeks, Peel said.
FED CATTLE PRICES UP FROM LOWS
Fed cattle prices dropped to an early fall low of about $107 per cwt in early September and traded in a narrow range of $110 to $111 for six weeks in September and October before breaking higher the last week of October, he said. Fed prices last week traded around $115 to $116 per cwt on tighter current feedlot supplies.
Total cattle slaughter for the past six weeks has averaged 1.9% higher, compared with the same period last year, Peel said. Cattle slaughter across all classes is beginning to fall into line with expectations.
Steer slaughter, which has averaged below year-ago levels all year, has been up 0.5% year over year for the past six weeks, he said. Heifer slaughter the past six weeks has averaged 3.0% above last year, bringing the year-to-date total down to a 7.2% increase over last year.
Beef cow slaughter has moderated, with the last six weeks averaging 4.9% higher year over year and bringing the year to date total down to 10.6% year-over-year increase.
CARCASS WEIGHTS UP
Cattle carcass weights have averaged 2.5 pounds higher this year but are averaging only 0.5 pounds higher the past six weeks, Peel said.
Steer carcass weights peaked at 903 pounds the first week of October but dropped to 894 in the most recent weekly data. He said, this may be the seasonal peak but the peak often happens in November so a couple more weeks are needed to be sure the seasonal peak is in.
Steer carcass weights have averaged 4.3 pounds heavier this year but are averaging only 1.7 pounds higher in the past six weeks. Heifer carcass weights also peaked in early October at 835 pounds before pulling back to 824 pounds in the last weekly data.
That may be a seasonal peak as well in carcass weights for heifers, he said. Heifer carcass weights have averaged 8.0 pounds heavier this year and are up 6.7 pounds in the last six weeks.
CATTLE, BEEF RECAP
Cash cattle trade last week waited until late Friday, and many sellers passed. Trade ranged from $114 to $116 per cwt on a live basis, steady to up $1 from the bulk of trade the previous week. Dressed-basis trade was reported at $180 to $197, up $6 to $17.
The USDA choice cutout Monday was up $0.09 per cwt at $218.59, while select was up $0.88 at $202.35. The choice/select spread narrowed to $16.24 from $17.03 with 59 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Friday, was $153.55 per cwt, down $0.34. This compares with Monday’s Nov settlement of $149.50, down $3.00.