Federally inspected cattle slaughter is moving in a sideways pattern, following the five-year average in form but at a much lower level and reflecting the diminished number of fed cattle available to the market.
The broad seasonal trends in US cattle slaughter are very entrenched, showing sharp dips during annual holiday weeks and peaks and valleys for annual changes in cattle physiology. If trends hold true, cattle slaughter this week should decline slightly from last week, only to drop sharply next week as the Labor Day holiday interrupts packing plant schedules.
Cattle slaughter last week was estimated at 590,000 head, up from 577,000 the previous week and mirroring a slight bump in the average weekly slaughter. However, this 590,000-head slaughter is 45,800 head, or 7.20%, fewer than last year’s 635,800 head.
If percentages hold true, slaughter this week should be about 615,500 head and about 534,027 during next week’s holiday-shortened plant schedules.
LIVE WEIGHTS KEEP RISING
Slaughter weights, however, continue to rise in response to high feeder cattle prices and lower corn costs. Average live weights reported by the USDA in the latest reporting week were 1,326 pounds, up one from 1,325 the previous week and up 14, or 10.7%, from 1,312 pounds during the same week a year earlier.
Carcass weights also are up a pound to 810 pounds from 809 the previous week and 799 the previous year.
The result is a weekly increase in beef production to 477 million pounds, up 11.5 million, or 2.47% from 465.5 million a week earlier. But because of a lower overall slaughter rate, beef production was down 29.8 million pounds, or 5.88%, from 506.8 million a year earlier.
RISING BEEF PRODUCTION CUTS BEEF, CATTLE PRICES
In addition to seasonal influences, wholesale beef and cash cattle prices are being pressured by the increased slaughter and beef production. As beef production rises the USDA’s beef cutout value shrinks along with the price paid for fed steers.
The USDA’s weekly boxed-beef cutout value declined last week and continues to decline this week. The USDA’s choice cutout value Tuesday fell $1.21 per cwt to $248.48. This was down $4.43, or 1.75%, from $252.91 a week earlier and $2.39, or 0.95%, below the simple five day average.
The USDA’s select cutout value also declined, moving down $0.59 per cwt to $238.48. This was $5.43, or 2.23%, below last week’s $243.91 and $2.83, or 1.17%, below the five-day average.
The choice/select spread narrowed a bit Tuesday to $10.00 from $10.62 but overall continues to widen seasonally as the percentage of choice production rises against the percentage of select.
The USDA reported that for the week ended Aug. 16, the percentage of carcasses grading prime was 4.16%, up from 3.98% the previous week and up from 3.19% in the same week a year earlier. The percentage of choice carcasses rose to 65.7% in the latest reporting week from 65.3% the previous week and 61.8% the previous year.
Conversely, the percentage of select carcasses declined slightly to 25.78% in the latest week from 25.81% the previous week and 29.96% the previous year.
CASH TRADE REMAINS QUIET
No cash cattle trading was reported Tuesday with some asking prices appearing at $155 on a live basis and $245 to $248 dressed. Last week, cattle traded at $152 to mostly $153 live and $241 to $243 dressed.
No bids were reported from packer buyers yet this week, but they are expected to be tough negotiators, what with weaker beef markets, a temporary bulge in fed cattle numbers and a holiday-shortened work week next week.