Grimes and Plain Weekly Cattle Outlook

CHICAGO - Jun 8/07 - SNS -- Following is a week ending cattle market comment from the University of Missouri - Columbia's Glenn Grimes and Ron Plain.

Packer bids for fed cattle were $1-3 lower this week. The 5-area daily weighted average price for slaughter steers sold through Thursday was $91.20/cwt on a live weight basis, down $1.40 from a week earlier, but still $9.48 higher than a year ago. Steers sold on a dressed basis averaged $144.35/cwt, $3.03 lower than the week before, but $15.89 higher than the same week of 2006. The seasonal price pattern favors a lower trend to cattle prices until August.

Choice boxed beef cutout values were also lower this week. On Friday morning, the choice carcass cutout value was $1.4993/pound, down 5.06 cents for the week. The select cutout was down 2.41 cents from the previous Friday to $1.4296 per pound. The choice-select spread is rather narrow for this time of year.

The June live cattle futures contract ended the week at $89.72/cwt, down $1.08 for the week. August settled at $89.60, down $1.07 from the week before. October settled at $93.22/cwt.

For a while this week South Korea suspended issuing import certificates for U.S. beef after receiving a shipment of bone-in ribs that was meant for U.S. consumption but mistakenly exported. Returning beef trade with Japan and South Korea to the pre-BSE status continues to be a most difficult process.

Federally inspected cattle slaughter for this week totaled 697,000 head, down 2.1% compared to a year ago. Year-to-date, cattle slaughter is up 2.1%. Because of lighter slaughter weight, beef production is only up 0.5%. Carcass weights for steers have been below year-ago levels for 16 of the last 18 weeks. Dressed weights during the week of May 26 averaged 804 pounds for steers, 8 pounds lighter than during the same week of 2006. Heifers averaged 729 pounds, down 10 pounds from last year.

Cow slaughter continues high. Through May, beef cow slaughter is up 16% compared to the same weeks in 2006 and 26% higher than for 2005. Dry weather and short pastures in the Central U.S. last year and the Southeast this spring have forced cattlemen to reduce their herds.

Cash bids for feeder cattle were higher, lower or steady this week, depending on where you were selling. The price ranges at Oklahoma City for medium and large frame steers were: 450-500##035; $124-$130, 500-550##035; $120-$134.50, 550-600##035; $116.50-$126.50, 600-650##035; $120-$123, 650-700##035; $112-119, 700-750##035; $108-112, 750-800##035; $100.75-$105.35, and 800-1000##035; $97.50-$102/cwt.

The corn market continues to be volatile causing uncertainty on feeder cattle prices. December corn futures ended the week at $3.92 per bushel, 9 cents higher than last Friday. The rally appears to be due to indications that export demand remains strong despite high prices.

The August feeder cattle futures contract ended the week at $108.20/cwt, down $2.05 from last Friday. September ended the week $1.90 lower at $108.17. October lost $1.70 this week to close at $108.20.

Issued by Glenn Grimes and Ron Plain

University of Missouri - Columbia

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