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Vol. 11, No. 59 / March 28, 2013
Cattle futures were notably higher in yesterdays US STEER & HEIFER SLAUGHTER, JAN - JUL
000 HEAD
trading although trade overnight was mixed. The nearby PRELIMINARY DATA BASED ON DAILY SLAUGHTER ESTIMATES - 7 DAY RUNNING TOTAL
650.0
live cattle futures contract (April) closed yesterday at $127.35/cwt,
JAN 11 - JUL 11 JAN 12 - JUL 12 JAN 13 - JUL 13
140 points higher than the previous close while June added 182
points to close at $122.95 and August added 140 points to close at 600.0
$124.025/cwt. Feeder cattle futures also were higher, with April
feeders up 180 points and May up 160 points. The surge in cattle 550.0
prices follows cash prices that traded firm, with higher asking
prices for cattle coming to market in the next couple of weeks. 500.0
Packers have been running fairly light schedules for much of this
past month but the expectation is that with weather warming up
450.0
and Lent behind us, slaughter should start to improve in April.
Steer and heifer slaughter is currently running at a weekly pace of
4th of July
about 449,000 head per week (seven day total through Wed.), 400.0 New Year Memorial
Day
down 6.2% compared to year ago levels. Cow and bull slaughter,
on the other hand, is currently running almost 13% higher than a 350.0
year ago. The surge in cattle prices at a time when boxed beef JAN FEB MAR APR MAY JUN JUL
values have been drifting lower will likely squeeze packer margins
in the very short term. So far boxed beef values have followed a $/cwt CHOICE BEEF CUTOUT, USDA, DAILY CLOSE, $/cwt
similar pattern as they did last year (see chart). The cutout ap- 220.0
proached a top of almost $200/cwt but it has now pulled back in 210.0
the $190 area. The fact that Easter is earlier this year should 2012
help the cutout rally earlier than it did a year ago. Retailers are 200.0 2013
looking for post Easter features and some beef items are now 190.0
priced notably lower than they were earlier this year (remember
April LC was $137/cwt at the beginning of the year). Cold weath- 180.0
2011
er across much of the US East Coast and parts of the Midwest so 170.0
far has negatively impacted sales compared to last year when
weather in heavily populated areas was warmer. As weather 160.0
improves, there should be some pent up demand that could under- 150.0 2010
pin beef cut sales in April and May. The feedlot inventory also
showed that total supplies of cattle on feed remain limited (down 140.0
almost 7% vs. year ago).
130.0
Retailers have been able to diversify to other pro- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
tein so far (whole bird chicken is at all time record highs) and
turkey burgers are showing up at in fast food restaurants. But least so far, by more dairy cows coming to market than a year ago.
the consumer preference for beef has not disappeared and going Milk prices have improved but feed costs will remain a concern for
into the grilling season, beef prices should see somewhat better the dairy industry at least until we have a better idea of how this
demand than they have seen so far. Challenges remain on the year’s harvest will shape up. Some beef cow producers also contin-
demand front, from slow growth in disposable incomes (some say ue to struggle with limited feed supplies and the sharp decline in
negative growth), relative high rates of real unemployment and feeder cattle values clearly has undermined the profitability of
underemployment to a growing gap in incomes. Export demand some herds. Drought conditions persist in a number of areas and
also remains finicky. Russia has stopped buying any US beef but the Panhandle bears watching as it is coming into the spring with
sales to Japan appear to have improved. Normally, beef exports a significant moisture deficit. Bottom line: Tight beef supplies
also tend to improve into the summer months. and improving spring demand should help support cattle and beef
As noted above, cow slaughter rates continue to run well prices. Weather, as always, remains a wild card.
above year ago levels. The increase continues to be driven, at
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