Weekly Mature U.S. Beef Cow Slaughter

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1 Louisiana Cattle Market Update Friday, July 9 th, 2010 Ross Pruitt, Department of Agricultural Economics and Agribusiness Louisiana State University AgCenter In two weeks, USDA NASS will release the July 1 st Cattle Inventory report. This report has a smaller sample size than the January 1 st report, so caution is warranted in interpreting the information it provides. The information is not directly comparable to the January 1 st report, but the July 1 st report does provide information on midyear estimates of beef replacement heifers, beef cows, and the first estimates of the 2010 calf crop. Early indications point toward another year on year reduction in beef cows and the U.S. calf crop. Year on year comparisons of weekly U.S. beef cow slaughter (excludes U.S. dairy cows and imported Canadian cows for slaughter) has been about 11% higher with approximately 155,000 more U.S. beef cows being slaughtered year to date in Higher slaughter cow prices have been a strong incentive to lure cull animals to market so far this year as demand for ground beef has been recession proof and available supply of animals for grinding has been tight worldwide. The increase in cow slaughter was reflected in the latest World Agricultural Supply and Demand Estimates released today which projects an increase in beef production for the rest of Pasture conditions do impact the rate of cow slaughter this time of year, but pasture conditions nationwide have been very good until the past few weeks. Over the last few weeks, the amount of range and pasture rated as poor or very poor has increased to around ten percent, a marked improvement over last year when the rating was fifteen to twenty percent rated as poor or very poor. Conditions in the southeast U.S. and Louisiana especially have varied from the good pasture conditions elsewhere. As the inventory report was drawn from surveys collected in June, the report will not likely reflect changes brought about by deterioration of pasture conditions in recent weeks. Adequate pasture conditions has led to some interest in summer grazing of stocker cattle in other states and may provide some strength to calf prices locally in the next few weeks if weather patterns stay favorable. Weekly Mature U.S. Beef Cow Slaughter Thousand of Beef Cows Avg Source: USDA NASS and LMIC

2 Twenty two parishes are now eligible for the Livestock Forage Disaster Program (LFP) offered through USDA FSA. This program is tied to USDA Drought Monitor and the conditions in north Louisiana have triggered eligibility for producers in north Louisiana. Producers will need to be covered by Noninsured Crop Disaster Assistance Program (NAP) in order to be eligible for payment. A waiver may be obtained for first time, socially disadvantaged, or limited resource farmers. Producers who have liquidated their herds as a result of the drought are eligible for payment if they can document (sales receipts) the liquidation was a result of the drought. Currently, producers in those 22 parishes are eligible for 2 monthly payments at 60% of the per head payment rate of $35.37 for adult beef cattle. More information on this program is available at: Cooperatives Working Together (CWT) announced earlier this week that 34,442 dairy cows were accepted into their latest herd retirement buyout. This accounts for approximately million pounds of milk as 194 of the 209 bids were accepted. Corn futures were higher this week from spillover in the wheat and equity markets combined with tighter than expected supply situation and increased usage stemming from three USDA reports (Crop Progress, Grain Stocks, and World Agricultural Supply and Demand Estimates). This week s In the Cattle Markets (available at delves into the potential ramifications of the tighter than expected supplies and is worth your time. Live cattle futures were higher this week on some positive signs from the equity markets combined with higher cash fed cattle trade. Most feeder cattle futures contract months were higher due to support from live cattle futures even though corn futures being higher. USDA s World Agricultural Supply and Demand Estimates report showed increases in production this year for beef, pork, and broilers with adjustments to 2011 production only occurring for broilers. Prices were decreased for pork and cattle this year and remain unaltered for Live cash cattle trade started in all regions on Wednesday on moderate demand. Prices ranged from $91 $92 (Texas and Kansas) to $93 (Colorado and Nebraska). Light trading occurred on Thursday in Texas at $92.50 with limited Friday trade in Kansas at $92. Louisiana slaughter cows were steady to $3 higher with bulls being steady to $3 higher. Feeder steers were $3 to $7 higher with feeder heifers $1 to $5 higher.

3 Table 1. Louisiana Auction Prices for the Week Ending July 9, Weight Steers Heifers Slaughter Classes $ $ Breaking $ $ $ Boners $ $ $ Lean ( ) $ $ $ Lean ( ) $ $ $ Lean (<750) $ $ $ $ $ Bulls, YG 1 2, <1,500 lbs $ $ $ Bulls, YG 1 2, >1,500 lbs $ $ $ $ $ Note: All prices are in $/cwt, steers and heifers are Medium and Large 1 2 Price ranges may reflect higher prices received in northern areas of the state in the middle of the week Source: USDA AMS Table 2. Louisiana Auction Prices for the Week Ending July 2, Weight Steers Heifers Slaughter Classes $ $ Breaking $ $ $ Boners $ $ $ Lean ( ) $ $ $ Lean ( ) $ $ $ Lean (<750) $ $ $ $ $ Bulls, YG 1 2, <1,500 lbs $ $ $ Bulls, YG 1 2, >1,500 lbs $ N/A N/A N/A N/A Note: All prices are in $/cwt, steers and heifers are Medium and Large 1 2 Price ranges may reflect higher prices received in northern areas of the state in the middle of the week Source: USDA AMS

4 Table 3. Futures Prices Live Feeder Month Cattle Change* Cattle Change* Corn Change* Jul 375 1/4 11 1/4 Aug $ $ Sept $ /2 11 Oct $ $ Nov $ Dec $ ¼ 10 3/4 Jan $ Feb $ Mar $ /2 Apr $ $ May $ /4 Jun $ Source: DTN * Change is from the previous Friday s close

5 Table 4. State and National Market Information Commodity This Week Last Week Last Year 5 Area Fed Steer Price Live $ $ $ Dressed $ $ $ Oklahoma City Feeder Cattle Prices cwt Med and Large #1 N/A $ $ cwt Med and Large #1 N/A $ $ Boxed Beef Cutout Values (weekly average) lb Choice cutout $ $ $ lb Select cutout $ $ $ U.S. Pork Cutout Value $ $ $ Georgia Dock Broilers $ $ $ Georgia B/S Breasts $ N/A $ Georgia Leg Quarters $ N/A $ Meat production (million lbs) Beef Pork Slaughter (1,000 head) Cattle Hogs 1,716 1,972 1,950 Broilers/Fryers 147, , ,678 Average Dressed Weight Cattle Hogs /3/2010 6/26/2010 7/4/2009 Poultry Placements (in thousands) 1 LA Broiler Egg Sets 3,470 3,455 3,349 US Broiler Egg Sets 206, , ,322 LA Broiler Chick Placements 3,132 3,164 2,715 US Broiler Chick Placements 175, , ,752 Source: USDA Agricultural Marketing Service, USDA National Agricultural Statistics Service and Livestock Marketing Information Center 1 Note the placements numbers are lagged by one week prior to publishing.