There were only 225 head—two lots of steers—offered in the weekly Fed Cattle Exchange auction on Wednesday and no takers. Likewise, country trade remained undeveloped through the afternoon.
Cattle futures took another step higher on Wednesday, though, building on early-week gains. Besides follow-through support, perhaps some of it was positioning ahead of the monthly Cattle on Feed report due out Friday, and the long holiday weekend ahead.
Live Cattle futures closed an average of $1.49 higher (55¢ higher in spot Jun to $2.15 higher).
Feeder Cattle futures closed an average of $2.01 higher (95¢ higher in spot May to $2.62 higher).
Wholesale beef values were mixed on Wednesday.
Choice boxed beef cutout value was 73¢ higher in the afternoon at $230.08/cwt. Select was 82¢ lower at $205.04. The Choice-Select spread widened to $25.04, the most since last June.
Select and Choice rib and chuck cuts sold steady to firm, while round cuts traded steady to weak, according to the Agricultural marketing Service. Choice loin cuts sold higher, weak for Select. Beef trimmings sold mostly moderately lower on light to moderate demand and moderate offerings.
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Major U.S. financial indices closed higher on Wednesday, after early follow-through pressure. Reportedly, much of the support was tied to release of minutes from the Federal Open Market Committee (FOMC) indicating a willingness to let inflation run a little past its objective of 2% without applying more brake via more aggressive interest rate hikes.
Consumer price inflation, as measured by the 12-month percentage change in the price index for personal consumption expenditures, was 2% in March, according to the minutes.
The Dow Jones Industrial Average closed 52 points higher. The S&P 500 closed 8 points higher. The NASDAQ closed 47 points higher.
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“…heifer carcass weights in 2018 are the same size as steer carcasses were in 2005,” notes Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.
In his weekly market comments, Peel provides insights regarding the impact of heifer slaughter, relative to overall fed beef production. It has to do with both the percentage of heifers in the slaughter mix and their average carcass weight.
“During periods of herd expansion, the heifer percentage of yearling slaughter drops to roughly 31%. During periods of herd liquidation, heifers will contribute about 40% to total yearling slaughter,” Peel explains. “Most recently, heifer slaughter has increased to an annual average of 34.3% of yearling slaughter as heifer retention slows down.”
As for weight, both steer and heifer carcass weights continue to trend higher, as they have for the past 50 years, Peel says. However, heifer carcass weights continue to grow more, relative to steers.
Heifer carcasses averaged 564 lbs. in 1967, according to Peel. The average weight last year was 811 lbs. Looking from another angle, he explains heifer carcasses averaged 84% of steer carcass weights until the mid 1970s. By 2010, heifer carcass weights were 92.3% of steer carcass weights. The percentage continues to edge higher since then—92.5% for the 12-month moving average.
“Heifer carcass weights appear to have provided a buffer against big steer carcasses for the past decade or more, but that may be coming to an end,” Peel says. “It may be that cattle and carcass weights can physically continue to get bigger, but there is a very real question of the demand implications and economic consequences of continued growth in steer and heifer carcass weights.”