Commentary from University of Missouri economists Glenn Grimes and Ron Plain.
The industry estimates of the February 1 Cattle on Feed report are not positive for the fed cattle market. The average of the number on feed is an increase of 6.2% from last year. Placements on feed during January are at an average of plus 12.7% from 2005 and fed cattle marketed during January up 2%.
The factor that is permitting producers to place more cattle on feed this year than at this time in 2005 is the availability of feeder cattle from Canada. Another factor that probably is making some more cattle available to place on feed is the poor condition of wheat pasture in the plains.
Retail beef prices in January were 0.1% below December and down 0.4% from January of 2005.
Cattle producers were not impacted by these lower retail beef prices but were able to sell fed cattle at a price 5.6% above a year earlier due to narrower marketing margins.
The packer margin in January was 2.8% below the same month in 2005 and the retailer and processor margin was down 6.5% this year compared to 12 months earlier.
Compared to last week, feeder steer and heifer prices at Oklahoma City were mostly steady on a limited test. Receipts this week at Oklahoma City were 2150, head compared to 8554 last week and 11,894 this week in 2005. The light receipts were due to an ice storm.
The range in prices for medium- and large- frame no. 1 steers by weight groups were: 550-600# $125-126 per cwt, 600-700# calves 109.75-119.00 per cwt, 700-750# calves $104.75-112.50 per cwt, yearlings 500-550# $135.00-139.00 per cwt, 615# yearlings $122 per cwt, 650-700# $118-118.25 per cwt, 700-800# $103.00-109.25 per cwt, and 800-1000# $92.00-103.00 per cwt.
Cash fed cattle prices gained some ground this week. The weighted average negotiated price for live cattle through Thursday for the five-market area were up $1.70 per cwt from a week earlier at $89.70 per cwt. The weighted average carcass price for the five-market are through Thursday at $142.70 per cwt were up $2.07 per cwt from seven days earlier.
The range in live cattle prices for the negotiated trade in midwest direct was $87 to $91 per cwt with a weighted average of $89.78 per cwt.
The range in live prices in the high plains direct trade was N/A to N/A per cwt with a weighted average of $N/A per cwt.
Slaughter this week under Federal Inspection was estimated at 568 thousand head down 0.5% from a year earlier.
Wholesale beef prices also gained some strength this week. Choice beef at $154.44 per cwt on Friday morning was up $4.93 per cwt for the week. Select beef gained $3.69 per cwt and was at $143.85 per cwt Friday morning.
Demand for live fed cattle for November - January was up 4.3% from 12 months earlier.
The February 1 cattle on feed report came in a little bearish compared to trade estimates. The number on fed came in at 6.8% above a year earlier. Placements on feed during January were up 16.5% and fed marketings during January were up 2.1% from 12 months earlier.