Rising Dressed Weights Indicate Feedlots Backing Up

Rising fed steer dressed weights indicate cattle are being backed up at the feedlots, a response to market forces that could haunt cattle feeders in coming weeks or months.

Market sources said the number of cattle slaughtered in August was more than 150,000 head fewer than was needed to keep feedlots from backing up potentially slaughter-ready cattle in the feedlots.

Slaughter last week was estimated at 571,000 head, keeping the weekly rate below last year and the previous five-year average and providing further evidence that cattle are being held back.

USDA data show steer carcass weights for the second week of September at 889 pounds, up 17, or 1.95%, from 872 pounds in the same week a year ago and 29.4 pounds, or 3.42% more than the previous five-year average of 859.6 pounds.  What’s more, slaughter steer dressed weights jumped sharply in the latest week after a one-week downturn, rising 12 pounds, or 1.37%, and surpassing the record high of 879 pounds set the last week of November last year.

Heavy first-quarter placements of younger calves into feedlots had many convinced that a summer bulge in fed cattle marketings for slaughter was in the cards.  However, those summer sales for slaughter were less than expected as feeders held cattle back for further growth and fattening.

Feeders were responding to lower prices for feed as corn prices fell and replacement feeder cattle prices rose to record highs.  But at some point, these cattle must come to market, and the number of cattle on feed 120 days or longer keeps rising, indicating more fat cattle are in the wings.

Unless the marketing rate increases in spite of softer fed cattle cash prices, slaughter this week may remain depressed, although there are indications that Texas feedlot showlists are up from last week so cash business may increase this week.

Year-to-date cattle slaughter is down 7.0% at 21.7 million head versus 23.3 million last year, while beef production is down 6.1% at 17.3 billion pounds from 18.5 billion last year.

 

COLD STORAGE BEEF SUPPLIES DOWN

 

As if to accentuate the reduced cattle slaughter rate, the USDA reported Monday that total red meat supplies in US freezers Sep. 1 were down slightly from the Aug. 1 total.  Total frozen red meat stocks, at 933.7 million pounds, were 7% less than a year ago’s 1.0 billion pounds.  It also was 0.39% less than the Aug. 1 total of 937.4 million.

Total pounds of beef in freezers, at 343.7 million, were down 6.17% from the previous month’s 366.3 million and down 20.1% from last year’s 460.2 million.

Frozen pork supplies were up 2% from the previous month but down slightly from last year.  Hog carcass weights are 8 pounds, or 4.0%, above year ago and slaughter is down 5.3% year to date, leaving pork production down only 1.6%.

Stocks of pork bellies were down 29% from last month but up 136% from last year.

Broiler production YTD is unchanged from year ago, and total frozen poultry supplies were up 1% from the previous month but down 14% from a year ago.  Total stocks of chicken were up slightly from the previous month but down 13% from last year.

Total pounds of turkey in freezers were up 1% from last month but down 15% from last year.

 

BEEF CONTINUES TO FADE

 

Wholesale boxed beef prices Monday continued to fade in what some sources are calling a post-holiday slump.  The USDA reported its choice cutout value at $243.02 per cwt, down $0.69, and its select cutout down $1.14 at $228.47.  The choice/select spread continued to widen, moving out to $14.54, and 110 loads of fabricated product sold into the spot market.