Cattle Outlook: Beef Production Idling

Author: Kristy

Beef production is slated to slow globally compared to pork and chicken.
By: Ron Plain and Scott Brown. University of Missouri


USDA’s Foreign Ag Service released 2015 projections for global meat production and trade a couple of weeks ago. Projections show a decrease in world beef production of 1.4% next year, compared to 1.1% growth for pork production and 1.5% growth for chicken. Brazil, the world’s second largest producer of beef behind the U.S., is expected to increase beef production by 3.0% next year. Combined with an expected U.S. production decline of 2.3%, U.S. beef production will only exceed Brazil’s output by 6.4% next year, compared to a 32.7% gap as recently as 2011. Countries expected to increase beef imports next year include Hong Kong, China, Egypt and Canada. Brazil, India, Uruguay and Paraguay will see the largest export gains, while shipments from Australia, the U.S. and Canada are projected to contract due to tighter supplies.

The U.S. Trade Representative announced this week that a final agreement on the Trans-Pacific Partnership (TPP), a trade agreement being negotiated by 12 Pacific Rim countries including the United States, is not expected to be announced in the coming month. A USDA/ERS report released this week assessing the impact of eliminating tariffs and tariff-rate quotas in these nations by 2025 (one hypothetical TPP scenario) found that U.S. meat export value could be $1 billion higher due to TPP by 2025. The value of U.S. meat imports would grow about one-fourth of that amount. Crucial to any timeline of concluding TPP is whether a trade promotion authority bill can be passed through Congress.

Fed cattle prices pulled back slightly from last week’s record high. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $167.42/cwt, down $1.25 from last week but up $35.23 from a year ago. The 5 area average dressed price for steers gained $0.07 this week to $263.88/cwt. This is $54.81 higher than last year’s dressed price average of $209.07/cwt.

Boxed beef cutout values advanced this week. The cutout value for choice carcasses this morning was $251.77/cwt, up $4.73 from last Friday and up $47.44 from a year ago. The select cutout was $239.17/cwt, up $6.73 for the week and $49.59 for the year. Today’s choice-select spread of $12.60/cwt is $2 tighter than last week.

This week’s cattle slaughter totaled 553 thousand head, down 4.0% from the week before, and 11.2% lower than the same week last year. It was the lightest non-holiday week cattle run since early March. The average dressed weight for steers slaughtered the week ending October 18 was 898 pounds, down 1 pound from last week’s record but 23 pounds heavier than the same week last year.

Feeder cattle prices were mostly $2 lower to $2 higher this week at Oklahoma City. This week’s price ranges for medium and large frame #1 steers by weight group were: 400-450# $330-$339, 450-500# $280-$305, 500-550# $263-$296, 550-600# $245-$306, 600-650# $226-$260, 650-700# $220-$251.75, 700-750# $223-$240, 750-800# $228-$239, 800-900# $212-$236.75, and 900-1000# $208-$222.50/cwt.

The December live cattle futures contract closed at $166.05/cwt today, down 85 cents for the week. February fed cattle settled at $166.10/cwt. The November feeder cattle contract fell 50 cents on the week to end at $234.15/cwt.

Today’s Ag Prices report showed that the preliminary October corn price fell for the fifth consecutive month, coming in at $3.28. However December corn closed today at $3.77, up 24 cents from last Friday and at the highest close since mid-August. Meanwhile December soybean meal futures finished at $389 per ton, up $39 from last week and $90/ton higher than last month’s close.

Posted in In The Industry |

Comments are closed.

Mail Us Facebook Twitter RSS YouTube
See More

Video Feature