July 19, 2004

US Feeder Cattle Prices Up Despite Lack Of Consumer Beef Demand

Compared to last week, feeder cattle and calves sold steady, several places around 2.00-5.00 higher.  However after Wednesday, some buyers began to show a little more concern about the lack of consumer beef demand. A few sales began to pop-up a little weaker, especially on calves.  Good rains seen over most of the country this summer.  Pastures, hay, and row crops are looking good.  Cost of weight gains still penciled in 50-55 cents per pound but a record corn crop is about ready for harvest. 

Abundant foliage and wet corn is ready to fill the huge storage pits.  Corn prices have dropped 70 cents in the past six weeks and other feed costs are declining.  However, slaughter cattle prices are offering negative support to the feeder cattle market.  The direct feedlot trade was 2.00-3.00 lower this week at 82.00-83.00 live and 3.50-5.00 lower dressed at 130.00-132.00.  Choice boxed beef cutouts were 139.00 and Select 137.00.  Slaughter cattle prices were 10.00 lower in the past six weeks.  Seasonal dog-days of summer are also sapping consumer beef demand. 

Year to date beef production is 10 percent below a year ago.  Short supplies and reduced wholesale beef prices are not cleaning out retail showcases.  Chain stores are reluctant to build inventories with what is still considered high prices and trends working lower.  Choice cutouts are 12.00 lower in the past six weeks but Select is 2.00 higher.  Average slaughter weights of steers are up considerably the past month and are now 13 lbs heavier than a year ago.  Nearby cattle futures had a bad week, July going off the board.  December contracts slipped only 3.50 in the past six weeks but have been nowhere near a hedging level in recent memory. 

Source:  AMS/USDA