Cattle Quick Thoughts
The January 2017 cattle inventory report released this week showed total U.S. cattle inventory was up 1.8 percent compared to January 2016. Buried beneath this overall number are a 3.5 percent increase in beef cows and a 1.2 percent increase in replacements. Both of these numbers can be surprising given the lower prices throughout 2016 that many hoped would discourage further expansion. The drought in Mississippi left the state with fewer beef cows than last year (down 5 percent). However, the MS decline was vastly outweighed by increases in other states. More beef cows and replacement heifers not only mean more cattle now but also a larger calf crop to come. Prices are driven by two primary factors: supply and demand. The high prices we saw in 2014/15 were driven by historically low supply. The current increased number of cattle puts downward pressure on prices. Any positive support for prices in the near future will likely have to come from finding ways to grow demand for U.S. beef.
The combination of the higher than expected placements in the cattle on feed report and the continued expansion mentioned above drove prices down significantly this week. Cash traded fed cattle were down $2.64 to an average of $118.76 for live sales compared to $121.40 last week. Dressed steers averaged $189.75 this week, down $3.80 last week. Trade volume was essentially the same as last week at 76,286 head.
Mississippi feeders weighing 450-500 pounds were down $4.50 at $139 while heavier 750-800 pound steers decreased $2 to $116.50 compared to $118.50 last week. Feeder prices in Oklahoma City for 500-550 pound steers were down $5.56 to $157.96 and OKC 750-800 pound steers averaged $126.22 which was down $6.57 from last week.
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Live cattle futures and feeder futures continued to slide. February live cattle were down 95 cents at $117.10, while April live cattle were down $1.28 over last week to $115.73. March feeder cattle were down $3.40 from last Friday at $123.78 while April futures were down $2.88 on the week at $123.65. Corn futures prices bumped up slightly this week with March and May corn futures each up a penny at $3.64 and $3.71, respectively.
Wholesale boxed beef prices were up this week with choice boxes averaging $192.88, up 79 cents from a week ago. Select boxes ended the week with an average of $189.85, an increase of $1.28 from last week. The choice-select spread decreased to just $3.03.
Note: all cattle and beef prices are quoted in dollars per hundredweight and corn prices are quoted in dollars per bushel unless stated otherwise.