Grimes and Plain Weekly Cattle Outlook

CHICAGO - Dec 8/06 - SNS -- Following is a week ending cattle market comment from the University of Missouri - Columbia's Glenn Grimes and Ron Plain.

Total cow slaughter for the year through the week of November 25 was up 10.5% from a year earlier. Dairy cow slaughter for this period was up 3.8% and beef cow slaughter for the period was up 17.4%. For the four weeks ending November 25, total cow slaughter was up 14.7% from 12 months earlier. Dairy cow slaughter was up 3.6% for these 4 weeks compared to the same period in 2005 and beef cow slaughter for these 4 weeks was up 24.2%.

These larger cow slaughter numbers this year than last are due mostly to the dry weather and short range and forage supplies in beef-cow country.

The rate of growth in the beef cow herd has been slowed and may be stopped due to the short forages.

Feeder cattle prices for 400-500 pounds steers for the week ending December 2 at Oklahoma City were between $16 and $17 per cwt below the week ending July 14 this year. 700-800 pound yearling steers at Oklahoma City were also $16-17 per cwt below the July period last week. These lower feeder cattle prices are a result mostly of higher corn prices. The closing price for December's corn futures were $2.77 per bushel in July. Last week December's corn futures close was $3.74 per bushel or nearly $1 per bushel higher in early December than July.

The higher corn prices are not likely to be a short run event. The higher corn prices are with the third largest corn crop of record and are due to demand and not a short supply. The demand for corn to produce ethanol is the major factor that has pushed corn prices the highest in about ten years.

It continues to look like cattle producers need to plan on high feed prices for the foreseeable future. Iowa State University has done some work that indicates ethanol producers can afford to pay some change over $4.00 per bushel for corn with the current government incentives and $60 per barrel oil.

Cattle feeder can reduce their feed cost some by including distillers grain in the ration. In fact, some of the ethanol plants are being built near large cattle feeding lots to manage the use of these grains.

Feeder steers and steer calves were steady to firm and heifer and heifer calves were $1.00-3.00 per cwt higher on a limited test at Oklahoma City this week compared to seven days earlier.

Medium and large frame number one steers by weight groups at Oklahoma City this week were: 400-500 pounds $128-138 per cwt, 500-600 pound $105.50-121.00 per cwt, 600-700 pound calves $97-105.50 per cwt, 700-750 pound calves $97.75-104.10 per cwt, 650-700 pound yearlings $103-106.75 per cwt, 700-800 pounds $102.75-105.50 per cwt and 800-900 pounds $94.75-101.75 per cwt.

The fed cattle market for negotiated trade was slow to develop this week. Through Thursday, only 26 thousand changed hands. The five-market weighted average price for the negotiated trade through Thursday at $85.60 per cwt was the same as 7 days earlier. The weighted average negotiated carcass price was up $0.25 per cwt at $135.50 per cwt for the week through Thursday compared to a week earlier.

Wholesale choice beef at $142.53 per cwt Friday morning was up $1.59 per cwt compared to a week earlier. Select beef was down $2.01 per cwt compared to 7 days earlier at $125.24 per cwt.

Slaughter this week under Federal Inspection was estimated at 643 thousand head, up 5.6% from a year earlier

Issued by Glenn Grimes and Ron Plain

University of Missouri - Columbia

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