Grimes and Plain Weekly Cattle Outlook

CHICAGO - Mar 2/07 - SNS -- Following is a week ending cattle market comment from the University of Missouri - Columbia's Glenn Grimes and Ron Plain.

Cattle markets got off to a good start this week following last Friday's announcement that only 1.69 million feeder cattle were placed on feed during January. That is down 23% from a year ago and the smallest January placement since 1996. As expected, the drop in placements was greatest for light weight cattle. The number of calves weighing less than 600 pounds placed on feed during January was 40% smaller than a year ago. This news helped fuel a modest rally in the futures market. The April live cattle futures contract ended the week at $97.65/cwt, up $1.48 for the week. June settled at $95.50, up $1.35 from the week before. August settled at $92.65/cwt.

It was an interesting week in the grain markets, which led to some higher prices for feeder cattle. Spring corn futures ended the week about 20 cents per bushel lower than they started. The sell off appears to be due to some early indications that the world's economy may be slowing and that U.S. corn exports might end up below forecasted levels. The March feeder cattle futures contract ended the week at $103.90/cwt, up $4.58 from last Friday. April ended the week $3.60 higher at $105.52. August gained $4.97 this week to close at $107.37.

Packer bids for fed cattle were a dollar or so higher this week on light trade volume. The 5-area daily weighted average price for slaughter steers sold through Thursday was $90.89/cwt on a live weight basis, up $1.16 from a week earlier and $2.56 higher than a year ago. Steers sold on a dressed basis averaged $146.96/cwt, $1.70 higher than the week before, and $5.20 higher than the same week of 2006.

Choice boxed beef cutout values were lower this week. On Friday morning, the choice carcass cutout value was $1.4865/pound, down 0.77 cents for the week. The select cutout was down 1.47 cents from the previous Friday to $1.4208 per pound. As is typical of late winter, the choice select spread has been rather narrow in recent weeks. Don't be surprised if it more than doubles by mid May.

Cash bids for feeder cattle moved higher this week. The price ranges at Oklahoma City for medium and large frame steers were: 450-500##035; $125.50-$130, 500-550##035; $118-$125, 550-600##035; $112.25-$122, 600-650##035; $107-$117, 650-700##035; $104.50-116, 700-750##035; $99-106, 750-800##035; $97-$103, and 800-1000##035; $91.85-$100.25/cwt.

Federally inspected cattle slaughter for this week totaled 625,000 head, up 0.8% compared to a year ago. Year-to-date, cattle slaughter is up 4.5%. Because of lighter slaughter weight, beef production is only up 3.6%. Carcass weights for steers and heifers started 2007 ten pounds heavier than last year. But, because of a lot of snow and cold in feedlot country, slaughter weights are now well below this time last year. Dressed weights during the week of February 17 averaged 816 pounds for steers, 13 pounds lighter than during the same week of 2006. Heifers averaged 758 pounds, down 19 pounds from last year.

Issued by Glenn Grimes and Ron Plain

University of Missouri - Columbia

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the author(s) that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its management.