Although there were too few transactions to trend, cash live fed cattle sales were reported in Kansas and Iowa-Minnesota on Tuesday at $115-$116, which is steady to $2 shy of last week’s pace in those regions. There were a few dressed trades in Nebraska at $184-$186, compared to $187-$188 last week.
Cattle futures drifted to a mostly lower close on Tuesday, unable to sustain the hint of early support.
Choice boxed beef cutout value was 47¢ lower Tuesday afternoon at $202.25/cwt. Select was 14¢ lower at $196.86.
Except for 15¢ and 2¢ higher at the back, Live Cattle futures closed an average of 37¢ lower (25¢ to 52¢ lower).
Except for 15¢ higher in April, Feeder Cattle futures closed an average of 36¢ lower (10¢ to 72¢ lower).
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Major U.S. financial indices closed lower on Tuesday, amid rally fatigue and U.S. sabre rattling with North Korea.
The Dow Jones Industrial Average closed down 33 points. The S&P 500 closed 5 points lower. The NASDAQ closed 13 points lower.
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“So far in 2017, beef cow slaughter is running 10.4% above 2016 levels,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “This follows a 13.7% year-over-year increase in 2016. Although increased beef cow slaughter is consistent with slower herd growth, it does not indicate herd liquidation or even zero herd growth. If beef cow slaughter continues at the current pace (as projected) through the end of the year, net culling for the beef herd will still be under 9% and less than the long term average culling rate.”
The sharp increase in beef cow slaughter in 2016 and 2017 is mostly the result of low culling during herd expansion since 2014, Peel explains.
“More cows in the herd, plus previously delayed culling, means that a substantial increase in beef cow slaughter is inevitable,” Peel says. “By 2018, herd culling rates may return to typical levels. Beef cow slaughter typically increases sharply in the fourth quarter to a seasonal peak but is projected to maintain the current year-over-year levels for the remainder of the year. Dairy cow slaughter has increased recently bringing the current year-to-date level to 3.0% above last year. This follows a 1.0% year-over-year decrease in 2016.”
Overall, Peel says total cattle slaughter this year is projected to increase 4.5-5.0% compared to last year. It will likely increase another 3.5-4.0% next year.