Cash fed cattle prices last week ended up $1-$3 higher on a live basis at $118.00 to $120.50/cwt., mostly $120. Dressed trade was $1-$3 higher at $188-$190.
The stronger cash trade fueled follow-support for Cattle futures early in Monday’s session. Support faded quickly, though. Cattle futures closed narrowly mixed, mostly to the downside, but still higher week to week.
Except for $1.07 higher in spot Dec, Live Cattle futures closed an average of 37¢ lower.
Except for 7¢ higher in the back two contracts, Feeder Cattle futures closed an average of 37¢ lower (10¢ to 85¢ lower).
Choice boxed beef cutout value was $1.28 higher on Monday afternoon at $203.15/cwt. Select was $1.76 higher at $185.01.
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Major U.S. financial indices took yet another step higher on Monday, with investors apparently expecting Congress to pass the tax reform bill as early as Tuesday. Merger and acquisition news also provided support.
The Dow Jones Industrial Average closed 140 points higher. The S&P 500 closed 14 points higher. The NASDAQ closed 58 points higher.
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Beef cow and heifer slaughter suggest cowherd expansion might be slowing, say analysts with USDA’s Economic Research Service (ERS) in the latest monthly Livestock, Dairy and Poultry Outlook released yesterday.
“Beef cow slaughter through October 2017 was 11% higher than the same period in 2016. Preliminary federally inspected beef cow slaughter in November has also been fairly strong and higher than November last year,” ERS analysts say. “Heifer slaughter has also seen a 12% increase through October 2017, while steer slaughter has only increased by about 3%.”
Likewise, while slowing, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says current beef cow and heifer slaughter rates still suggest herd expansion.
“Part of the increase in cow slaughter is simply due to herd growth since 2014,” Peel explained in his market comments last week. “However, like heifer slaughter, beef cow slaughter was sharply reduced in 2014-2016 as a part of jumpstarting herd expansion. Net beef cow culling was a record low 7.6% in 2015. Sustained below-average culling rates in 2014-2016 were possible following above average culling rates from 2008-2013, including drought-forced liquidation that removed many older cows, and allowed a period of reduced culling as herd expansion began. If the current beef cow slaughter pace continues through the end of the year, the 2017 beef cow culling rate will be 9.0%, still below but close to the long term average of 9.6%. In other words, the industry is returning to normal beef cow culling rates. Both heifer and beef cow slaughter are consistent with continued but slowing herd expansion.”
As always, Mom Nature will have plenty to say about the possibilities, one way or the other.