January-July Beef Imports Lower

US beef imports were mostly lower for the January-July period this year, compared with the same period in 2016, said the USDA’s Livestock, Dairy, and Poultry Outlook report Monday.

January-July beef imports were 4.3% below a year earlier, largely because of increased domestic production and lower production in Oceania, the Outlook report said.

 

PRODUCTION FORCAST DOWN SLIGHTLY

 

The forecast for 2017 commercial beef production was lowered by 140 million pounds to 26.6 billion, on a slower expected fed cattle marketing pace through the rest of the year, despite heavier dressed weights and higher cow slaughter, the Outlook report said.

For 2018, the commercial beef production forecast was lowered as a slower rate of placements during the second half of 2017 was thought likely to result in reduced steer and heifer slaughter in the first half of 2018.

Drought conditions in the Northern Plains and hurricanes Harvey and Irma have likely affected regional cattle production, the USDA said.  But while much of the effects from the Northern Plains drought likely have already played out, it’s too early to estimate the effects of the hurricanes.

 

FORAGE OPPORTUNITIES COULD EXPAND BACKGROUNDING

 

Favorable weather in the Southern Plains has improved pasture conditions to be on par with this time last year, the USDA said.  Although improved forage conditions may increase incentives to background calves, fourth-quarter feedlot placements were expected to remain relatively large given the availability of calves.

However, expected declines in cattle feeding margins likely will encourage feedlots to bid less for calves, the USDA said.

Prices reported by the Agricultural Marketing Service for medium-frame 750- to 800-pound feeder steers in August declined about $7 per cwt from July, the Outlook report said.  Prices in early September moved higher as improvements in forage conditions likely provided cow/calf producers and backgrounders with the ability to hold off selling.

The fourth-quarter feeder steer price forecast was in the range of $140 to $146 per cwt, turning lower in the first quarter of 2018 to $132 to $140.

 

FED PRICES STEADY

 

Fed steer prices have seen little support over the past month as the USDA’s five-area price for the week ending Sep. 10 was $104.92 per cwt, down sharply from this year’s high of $144.60 during the first week of May.

According to the August NASS Cattle on Feed report, the number of cattle on feed Aug. 1 was up 4% year over year.  Also, the number of cattle on feed for more than 120 days was up 8.6% from July.

That likely implies feedlots will have sufficient cattle to sell going into the fourth quarter, which could depress fed cattle prices.  In addition, an abundant supply of competing meats will be available.

The price forecast for the five-area fed steers in the fourth quarter was $107 to $113 per cwt.  Fed steer prices were forecast to make a seasonal rebound in the first quarter of 2018 to $110 to $120.

 

CATTLE, BEEF RECAP

 

Only one lot of cattle sold Wednesday on the Livestock Exchange video auction at $104.75 per cwt.

Cash trade was reported Friday at $104 to mostly $105 per cwt on a live basis, steady to down $1 from the previous week, and at mostly $165 to $166 on a dressed basis, steady to down $1.

The USDA’s choice cutout Monday was up $1.20 per cwt at $192.62, while select was up $1.85 at $187.70.  The choice/select spread narrowed to $4.92 from $5.57 with 77 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Friday was $150.09 per cwt, up $0.36.  This compares with Monday’s Sep settlement of $150.80, up $0.57.