The August USDA Cattle on Feed report, combined with other USDA data, suggests a more robust US beef demand than is implied by other metrics, a market analyst said by email Tuesday.
Steer and heifer slaughter and carcass weights are up significantly from a year ago, yet the market provides enough margin for a higher rate of placements and a higher rate of marketings than last year. And, the extra meat isn’t stacking up in cold storage or being exported.
It all makes for a bullish market outlook, the analyst said.
THE ANALYSIS
USDA slaughter data showed that steer carcass and live weights increased in 2024 from 2023, the analyst said. Carcass weights rose by 22 pounds, and live weights increased 23 pounds.
Similar statistics show up for heifers, with carcass and live weights rising. Carcass weights went up by 24 pounds and live weights increased by 50 pounds.
The August 2024 COF report showed 11.1 million head of cattle on feed Aug. 1, 100.1% of a year ago, versus the August 2023 report, which showed 11.0 million head, 98% of a year earlier.
That suggests the cattle industry is maintaining, or slightly increasing, feedlot placements despite potential market challenges, the analyst said.
August 2024 feedlot placements were 1.7 million head, 106% of August 2023, while August 2023 placements totaled 1.62 million head, 92% of the previous year, he said.
“In August 2023, placements were lower than the previous year, likely indicating tighter supplies or cautious decisions by producers in response to market conditions,” the analyst said. “In contrast, August 2024 saw an increase in placements, suggesting more confidence in market conditions or better availability of feeder cattle. This increase in placements points to a recovery or expansion phase.”
August 2024 feedlot marketings were listed by the USDA at 1.86 million head, 108% of a year earlier, while August 2023 marketings were 1.72 million head, 95% of a year earlier, the analyst pointed out. This suggests more cattle are being moved through the system, possibly because of favorable market prices of improved demand. Whatever, it allowed feedlots to move cattle more efficiently or profitably this year.
PLUS
With more cattle being killed at heavier weights beef should be stacking up somewhere, but it’s not, a second analyst said. The USDA’s August Cold Storage report said total pounds of beef in freezers were 407.127 million pounds, down from 410.459 million a year ago.
And USDA-reported beef exports through June totaled 643,733 tonnes, down from 669,176 tonnes a year earlier.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $183.82 per cwt to $186.22, compared with last week’s range of $185.00 to $196.79 per cwt. FOB dressed steers, and heifers went for $290.68 per cwt to $296.44, compared with $292.43 to $300.38.
The USDA choice cutout Tuesday was down $3.93 per cwt at $311.97 while select was up $0.06 at $300.25. The choice/select spread narrowed to $11.72 from $15.71 with 137 loads of fabricated product and 31 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $375.62 per cwt, and 50% beef was $155.61.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.48 to $1.58 a bushel over the Sep corn contract, which settled at $3.67 1/4 a bushel, up $0.05 1/4.
No live cattle contracts were tendered for delivery Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $242.63 per cwt, down $0.20. This compares with Tuesday’s Aug contract settlement of $244.20, down $0.30, and the Sep settlement of $241.92, up $0.57.