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Agricultural News

Peel Responds to Retail Beef Prices, Cattle on Feed and More USDA Data

Mon, 24 Aug 2015 11:23:50 CDT

Peel Responds to Retail Beef Prices, Cattle on Feed and More USDA Data Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist, writes in the latest Cow/Calf Corner newsletter.

An assortment of new data was released recently. Choice retail beef prices for July decreased for the second month in a row, dropping 4.1 cents per pound from June to $636.5/cwt. Choice retail beef prices peaked in May at $641.2/cwt. All-Fresh retail beef prices, however, continued to increase, setting a new record in July at $616.3/cwt., up 5.2 cents per pound from June. The July spread between the Choice and All-Fresh retail price at 20.2 cents per pound is the narrowest since June of 2012.   The July All-Fresh retail price is 96.8 percent of the Choice retail price, a new record percentage and compares to the five year average of 93.1 percent. The percent Choice grading of cattle is high resulting is a relatively large supply of Choice to Select beef, likely the cause of the narrow spread between Choice and All-Fresh retail beef prices.

The August Cattle on Feed report pegged July placements at 99 percent of the low level of one year ago. July marketings were 97 percent of last year. Both placements and marketings in July were at the lowest July levels since 1995. Though the larger feeder supply indicated by the July inventory report will result in increased feedlot placements in the coming months, the flow of cattle through feedlots at the current time continues to be low. This is reflected in year-to-date cattle slaughter, down 7.0 percent compared to last year. The August 1 cattle on-feed inventory was 102 percent of last year as a result of continued slowdown of cattle in the feedlot, resulting in increased slaughter and carcass weights. Average cattle carcass weights are currently 13 pounds heavier than this time last year and partially offset reduced cattle slaughter resulting in year-to-date total beef production down 4.7 percent from one year ago.

The August Cold Storage report showed that beef stocks in cold storage were down from June but were 24 percent above year ago levels. This is a continuation of the large beef stocks that began building about one year ago after beef stocks had been drawn to very low levels in early 2014. The current level is less than five percent above the five year average for July. The relatively large level of cold storage inventories most likely reflects the continued large imports of processing beef, led by the 65 percent year over year increase in imports of Australian beef so far this year.

On August 20, USDA issued the U.S. and Canadian Cattle report which shows July 1 cattle inventories for the U.S. and Canada combined. The report highlights the contrast between the cattle industry situations in Canada and the U.S. The July 1 U.S. cattle inventory numbers (previously released) confirm that significant herd expansion is underway in the U.S. In contrast, July 1 Canadian cattle inventories indicate continued herd liquidation. Canadian beef cow inventories are 97 percent of one year ago and beef replacement heifers are 99 percent of last year. The July 1 all cattle inventory in Canada was 13.0 million head, down 2 percent year over year. Canadian cattle inventories have decreased an average of 2.6 percent annually the last ten years from the most recent peak of 16.9 million head in 2005. Earlier indications of the beginning of herd expansion in Canada may be being preempted by severe drought this summer in the Canadian Prairie Provinces.



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