Slaughter cow prices are declining as total US cow slaughter continues to advance unseasonably, USDA data show.
The USDA’s National Agricultural Statistics Service reports that federally inspected cow slaughter last week totaled 139,554 head, up 4,470, or 3.31%, from 135,084 a week earlier and up 15,454, or 12.5%, from 124,100 a year earlier. It also was up 24,582, or 21.4%, from the 2016-2020 average of 114,972.
At the same time, slaughter cow prices last week averaged $64.35 per cwt, down $0.94, or 1.44%, from $65.29 a week earlier. However, the price was up $6.06 per cwt, or 10.4%, from last year’s average of $58.29 and up $1.03, or 1.63%, from the previous five-year average of $63.32.
PRICES SHOULD FLATTEN, NOT WEAKEN
After reaching an annual high next week, the data show slaughter cow prices should flatten through July before sagging again into late October where they level out again.
There is a bulge that occurs in February/March, but it doesn’t surpass next week’s annual high.
It could be argued that this year’s February price bulge to $64.92 per cwt was an anomaly that just came a couple weeks early. It was followed by a secondary peak, which also is normal, although it doesn’t occur until the last week of April – next week.
However, this year’s weekly cow slaughter has been above last year’s since the second week of January. Weekly cow slaughter also was above the 2016-2020 average for all but two weeks last year.
Supply has not been the issue. In fact, there was a supply bulge in mid-February that corresponds to the February price bulge.
Supply may become more of a price pressuring factor if slaughter remains high. A normal mid-summer decline in slaughter is likely, but slaughter is on course to remain above last year again.
COW KILL INCREASE IS BEEF COWS
NASS data also showed that the increase in cow slaughter was confined to beef cows. A graph of weekly dairy cow slaughter shows little deviation from last year or the previous five-year average, while a graph of beef cow slaughter shows a near-identical slaughter last year compared with the average and continued higher-than-both kills this year.
For instance, last week’s beef cow slaughter was pegged at 78,681 head, up 4,611, or 6.23%, from the previous week’s 74,070 head and up 15,081, or 23.7%, from last year’s 63,600 and up 24,292, or 44.7%, from the 2016-2020 average of 54,389.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $139.77 to $144.15 per cwt, compared with last week’s range of $141.47 to $143.77. FOB dressed steers, and heifers went for $219.04 to $223.13 per cwt, versus $217.03 to $221.89.
The USDA choice cutout Tuesday was down $2.43 per cwt at $264.17, while select was off $0.29 at $256.23. The choice/select spread narrowed to $7.94 from $10.08 with 137 loads of fabricated product and 45 loads of trimmings and grinds sold into the spot market.
The USDA reported that basis bids for corn from feeders in the Southern Plains were unchanged at $1.50 to $1.60 a bushel over the May futures and for southwest Kansas were unchanged at $0.10 over May, which settled at $8.03 1/4 a bushel, up $0.03.
Twenty-five heifer contracts were tendered for delivery Tuesday. Another 25 were retendered at two. Twenty-five were demanded at zero, and 25 were demanded at two.
The CME Feeder Cattle Index for the seven days ended Monday was $156.12 per cwt down $0.40. This compares with Tuesday’s Apr contract settlement $156.20, down $0.35, and May’s $160.72, down $0.57.