April 10, 2007

 

US fed cattle prices reach highest levels since late 2003

 

 

US cash cattle prices last week surged US$4 to US$5 per hundredweight on a live basis and US$6 to US$7 dressed to their highest levels since late 2003.

 

Beef packers bid aggressively for the cattle, most of which will be slaughtered this week and the beef used for grocers' features during the second half of April. Expectations of strength in demand for the middle meats, especially choice grade, to be used for grilling, helped fuel the advance in cash cattle prices.

 

Cattle owners were able to get more money for their cattle than some had expected at the beginning of the week, a market analyst said. The cash strength, initiated in Nebraska on Wednesday afternoon, also surprised many of the futures traders at the Chicago Mercantile Exchange Thursday morning, the analyst said. The result was gap-higher openings in most live cattle contracts.

 

Weekly cattle slaughters in March averaged about 630,000 head, up from an average of 607,000 for the same period a year ago. However, March this year had one less weekday and one more Saturday than a year ago, and preliminary data show March cattle slaughter this year at about 31,000 head, or 1.1 percent, below the year-ago monthly total.

 

The number of cattle on feed at the beginning of March was down nearly 4 percent from a year ago. Placements of young cattle into the feedyards in February were up about 4 percent from a year ago, but many of those newly placed animals will not be ready for slaughter until late June or July.

 

Demand for grilling cuts, including premium steaks such as T-bones, strips, and rib-eyes, is normally very strong from the beginning of the season in May through Independence Day. This year, it appears that supplies of the preferred choice beef could be the tightest at that time.

 

In the pork sector, cash hog prices were modestly higher last week. The USDA's national weighted average carcass price Friday was US$60.89, up US$2, or 3.4 percent, from a week earlier. Contributing to the gains late in the week were expectations of tightened supplies of slaughter-ready hogs and firmer prices for this week.

 

Seven plants--five in the western corn belt, one in the eastern corn belt and one in North Carolina--are scheduled to be dark Monday in observance of the Easter holiday but most of these are expected to operate on Saturday to make up for the downtime.

 

Analysts said hog supplies normally begin a seasonal tightening trend at this time of the year and weekly slaughters decline from week to week into the summer. This along with expected higher beef prices due to the rise in the fed cattle markets last week could serve to push up wholesale pork prices if indeed the hog slaughter rates decline.

 

 

CATTLE/HOG SLAUGHTERS

 

US cattle slaughter last week was estimated at 606,000 head, compared with 620,000 a week ago and 636,000 a year ago. Year-to-date cattle slaughter stands at 8.632 million head, up 3.5 percent from a year ago.

 

The USDA estimates the week's hog slaughter at 2.052 million head, compared with 2.097 million the previous week and 2.012 million last year. The year-to-date total is 28.496 million head, up 1.8 percent from a year ago.

 

 

TOTAL MEAT PRODUCTION

 

The USDA estimated total beef, pork and lamb production for last week at 883.4 million pounds, compared with 904.0 million the previous week and 899.5 million a year ago. Year-to-date combined meat output is 12.493 billion pounds, up 1.9 percent from last year.

Broiler/fryer slaughter last week was estimated at 153.036 million head, compared with 158.956 million a week ago and 162.595 million a year ago.