The Cattle Range Home Page
September 11, 2017
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Cattle Slaughter Expected To Rise

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Cattle Slaughter Expected To Rise
Daily Livestock Report

Cattle slaughter was lower last week as processing plants were closed in observation of Labor Day on Monday, September 4. Total cattle slaughter was estimated at 555,000 head, 4.8% higher than the previous year. Expectations are for slaughter to once again rise to over 600,000 head per week in the next few weeks as large placements during Mar-May bolster supplies of market ready cattle. Slaughter has been running at over 600,000 head per week for the past three months but absorbing this volume of beef after Labor Day is notably more difficult than at the peak of the grilling season. 

Beef demand was quite robust in May and June but it may have slipped a bit in recent weeks. We will update you more on this topic later this week when BLS issues its latest CPI/retail price update. Dr Steve Meyer in the past has regularly updated our readers on the trend in real per capita expenditures and hope to continue to do so based on his work. The challenge for the beef/cattle industry at this point is the number of animals on offer on a weekly basis. Processing plants are having no trouble finding enough cattle to run full daily schedules and packers continue to demand a significant premium in order to run on Saturday. Labor availability remains an issue and, with no major seasonal demand at this point, packers appear to have little incentive to raise bids in order to run extra shifts. 

Steer weights are now running around 887 pounds compared to 832 pounds in early May. This has increased the amount of trim available in the market on a weekly basis. The increase in trim availability comes at a time when weather starts to turn and (some) consumers put a cover over their grills. Nowhere is this shift more evident than in the price of 50CL beef trim. Prices for fat beef trimmings spiked in early May due to a combination of lower than expected cattle weights and seasonal demand. At their peak prices were at $200/cwt, an unheard of price for this item and about double what one could have reasonably expected. 

Last week the average price of 50CL beef trim was around $0.48/cwt. If we use the 10% yield rule of thumb for fat trimmings from the average carcass, the decline in the value of 50CL trim alone has removed around $124 from the average steer carcass or $9/cwt for a live steer. Seasonally lower prices for middle meats certainly have had an impact as well but one needs to consider the outsize impact that fat trimmings had on cattle prices earlier in the year and their eventual return to earth.

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