Grimes and Plain Weekly Cattle Outlook

CHICAGO - Dec 9/07 - SNS -- Following is a week ending cattle market comment from the University of Missouri - Columbia's Glenn Grimes and Ron Plain.

Cow slaughter for the year through the week ending November 17 was up about 6.5 percent from a year earlier. This is on top of a 10.5 percent increase in 2006 compared to 2005. Cow slaughter for the four weeks ending November 17 was up 1.4 percent from 12 months earlier. The large increase in cow slaughter in 2006 was due to drought in the southwestern and western states. The continued big cull cow slaughter is a result of the dry weather in southeast states and high hay prices over much of the U.S. in 2007.

Total cattle inventory and the cow herd is expected to be a little smaller on January 1, 2008 than 12 months earlier.

Demand for all meats other than broilers for January-October of 2007 was stronger than a year earlier. Demand at the consumer level for the ten-month period for beef up 0.9 percent, pork up 2.3 percent and turkey up 3.4 percent. Broiler demand for this period was down 1.2 percent but improving for January-July broiler demand was down 3.2 percent. Demand for both live fed cattle and live hogs show robust growth for January-October. Live fed cattle demand was up 3.7 percent and live hog demand was up 3.2 percent.

The 2007 calf crop is forecast by USDA to be slightly smaller than the 2006 calf crop. However, the feeder cattle supply from the domestic herd will be some smaller than indicated by the calf crop because of larger calf slaughter. For January-October calf slaughter was up 11 percent or about 62 thousand head this year compared to 2006. Therefore, if demand for live fed cattle and beef holds steady or gains fed cattle prices are likely to stay strong relative to history.

Feeder cattle lightly tested at Oklahoma City this week and $1-2 per cwt lower than last week. Steer calves were steady but heifer calves were steady to 2 per cwt higher than seven days earlier.

The prices for medium and large frame Number One steers this week by weight groups at Oklahoma City were: 400-500 pounds $124-139.50 per cwt, 500-600 pounds $114-129.25 per cwt, 600-700-pound calves $103-115.50. Value-added calves 500-600 pounds $115.50-128 per cwt, 600-700-pound value-added calves $104-115.50 per cwt, 600-700-pound yearling $108-116 per cwt, 700-800 pounds $107.25-111.25 per cwt and 800-1,000 pounds $104.50-107.50 per cwt.

Wholesale beef prices Friday morning showed Choice beef at $147.23 per cwt, down $4.42 per ct from last Friday. Select beef was down $3.19 per cwt from seven days earlier at $130.66 per cwt.

The weighted average price for fed cattle for the five-market area through Thursday was down $2.80 per cwt from a week earlier at $92.35 per cwt. The weighted average carcass price for the five-market area showed prices at $146.50 per cwt down $3.40 per cwt from last week.

Slaughter under Federal Inspection was estimated at 663 thousand head, up 3.1 percent from a year earlier. Negotiated cattle through Thursday amounted to only about 13 thousand head.

Issued by Glenn Grimes and Ron Plain

University of Missouri - Columbia

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