July 15, 2013

US beef exports to Japan up 50% in Jan-May 2013

US beef shipments to Japan in January to May 2013 are up 50% on-year and were at their highest level in May since October 2003.

Other markets are not faring quite as well, however, and total US beef exports are trailing year ago levels by 2%. Russia's ban on meat containing ractopamine has basically brought a halt to all shipments there, and beef exports to both Mexico and Korea are down nearly 25%, adding to the overall weakness. The fact that the weakening of the US dollar against many major currencies has slowed considerably or even reversed in the past few quarters is contributing to the slowdown.

The US corn harvest is still projected by USDA to be record large, 6.6% above the previous high recorded in 2009. This should help feedlots be able to both increase the prices they pay for feeder animals and still improve what has been a long stretch of difficult financial times since crop prices spiked. Whether higher calf prices can overcome the worsening drought in the western US and lead to beef cow herd expansion in the next few months is still in question.

It was another rough week for boxed beef cut-out values, as the choice cu-out declined every day this week. The Friday (Jul 6) morning choice value was US$191.86/cwt, down US$4.48 for the week and nearly US$20/cwt lower than the record high posted on May 23. The select carcass cut-out was at US$184.02/cwt, down US$3.71 for the week.

Despite rather sharp declines in the cut-outs, fed cattle prices were mixed this week. Through Thursday (Jul 11), the five-area average price for slaughter steers sold on a live weight basis was US$121.24/cwt, up US$1.66 from last week and up US$6.56/cwt from the same week last year. Steer prices on a dressed basis averaged US$191.73/cwt this week, down US$0.86 cents from a week ago but up US$9.57 from a year ago.

This week's cattle slaughter totalled 640,000 head, up 81,000 head from last week's Independence Day shortened schedule, but down 5,000 head from a year ago. The average steer dressed weight for the week ending on June 29 was 855 pounds, up one pound from last week but down one pound from last year.

Oklahoma City feeder cattle prices were US$3-5 higher this week, except for 900 pounds and up which advanced by up to US$10. The August live cattle futures contract closed at US$122.10/cwt Friday (Jul 12), up US$0.15 from last week's close. The October fed cattle contract gained US$0.05 from last Friday (Jul 5) to settle at US$126.30/cwt. December ended the week at US$128.425/cwt.

August feeder cattle futures settled at US$150.40/cwt, down US$1.40 for the week. The September contract lost US$1.17 from last Friday to close at US$153.00/cwt. October settled at US$154.70/cwt.