Fed cattle prices have been climbing, slowly, following the market correction that began in late July-early August, said David Anderson, livestock and food product marketing specialist at Texas A&M University, in a Livestock Marketing Information Center letter called In The Cattle Markets.
After falling from a high of $197.09 to $181.18 per cwt. the USDA’s five-market weekly average has climbed back to the $190.00 area this week. Prices were in the $188.00 range later during the week ending Oct. 4.
IT’S A SEASONAL THING
Normally, fed cattle prices increase, seasonally, in the Fall. A 10-year seasonal fed cattle price index would suggest that prices increase about five percentage points from September to November.
Last year was an exception to that when prices declined during the Fall. It’s not unusual for fed cattle prices to hit their annual high in the Fall, but that would require a faster pace of increase than seen, so far.
BEEF PRODUCTION ASIDE
Prices continue to creep higher in the face of larger beef production and a cutout value that has been at or below last year. Fed steer weights continue to increase and are near record highs.
Federally inspected dressed weights hit 948 pounds for the week ending Oct. 4 and 864 pounds last week, and may not be at their Fall peak yet. Heifer dressed weights are not quite at record highs.
The combination of more fed cattle going to market and record high weights means beef production exceeded that of a year ago through August and September. The increase in fed beef production continues to offset the decline in beef and dairy cow slaughter.
CHOICE GRADING UP
Adding to the beef production equation is the percent of beef grading choice. Almost 73% of beef graded during the first week of October graded choice, a 2.5 percentage point increase over a year ago.
For August and September, a larger percentage of beef graded was choice compared with a year ago. Combine increased fed steer and heifer slaughter, larger dressed weights and more grading choice means total supplies of choice beef are greater than a year ago.
More beef is grading prime than last year also, contributing to greater supplies of prime beef than last year. Supplies are likely keeping a lid on the cutout value making the slow increase in fed cattle prices a little more impressive, Anderson said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $189.82 per cwt to $194.48, compared with last week’s range of $187.95 to $194.48 per cwt. FOB dressed steers, and heifers went for $294.97 per cwt to $300.65, compared with $293.66 to $298.77.
The USDA choice cutout Wednesday was down $1.17 per cwt at $319.44 while select was down $0.64 at $289.32. The choice/select spread narrowed to $30.12 from $30.65 with 129 loads of fabricated product and 26 loads of trimmings and grinds sold into the spot market.
The USDA-listed weighted average wholesale price for fresh 90% lean beef was $352.91 per cwt, and 50% beef was $62.84.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.26 to $1.45 a bushel over the Dec corn contract and unchanged in Kansas at $0.25 over Dec, which settled at $4.11 1/2 a bushel, down $0.02 1/4.
No cattle contracts were tendered for delivery Wednesday against the Oct contract.
The CME Feeder Cattle Index for the seven days ended Tuesday was $250.06 per cwt, up $0.57. This compares with Wednesday’s Oct contract settlement of $250.95, up $0.92 and Nov’s $245.50, down $1.10.