Catch a roundup of each week’s cattle-market activity every Friday afternoon at beefmagazine.com. Steve Kay, editor and publisher of Cattle Buyers Weekly, the number-one marketing and business newsletter for the North American meat and livestock industry, will provide the week-ending summary.
For more info on Kay’s Cattle Buyers Weekly subscription newsletter, visit www.cattlebuyersweekly.com, phone 707-765-1725, or email info@cattlebuyersweekly.com.
Weekly Update: May 25, 2012
The live cattle trade Friday morning was light up north and in Kansas and inactive in Texas. USDA’s mandatory price reporting (MPR) service reported that Nebraska sold 2,395 head at $194/cwt. dressed or $122 live for a weekly total of 45,350 head. Iowa-southern Minnesota sold 1,099 head at $121.49 live for a weekly total of 28,314 head. Kansas sold 2074 head at $121 for a weekly total of 26,460 head. Texas sold no cattle for a weekly total of 20,012 head. The MPR weekly totals include negotiated cash and grid sales.
Live cattle futures closed lower. June closed down 22 points at $117.65/cwt. (vs. $119.52 last Friday), August closed down 70 points at $119.10, October closed down 67 points at $123.50, December closed down 65 points at $126.80, February closed down 57 points at $128.57 and April closed down 60 points at $130.40.
The week’s cattle slaughter was an estimated 636,000 head (vs. 673,739 head last year), with Friday’s kill 124,000 head and Saturday’s kill 10,000 head. Year-to-date FI slaughter is an estimated 12.851M head, down 4.8% or 650,000 head from 2011’s
13.501M head. Hog slaughter year to date is up 1.6% on last year.
Boxed-beef cutout values were lower on light to moderate demand and moderate offerings. The Choice cutout declined $0.93/cwt. from the day before to $194.63/cwt. (vs. $192.51 last Friday) while the Select cutout declined $1.38 to $185.46. The Choice-Select price spread was $9.17/cwt. (vs. $5.95 last Friday). The reported spot boxed-beef trade for the week was 727 loads of fabricated cuts, 10.8% lower than the 815 loads the week before.
Packer margins for the week were positive by $9.87/head, compared to a positive $10.36 the week before, according to HedgersEdge.com.
PROJECTED CATTLE-FEEDING MARGIN
The projected cattle feeding margin (cattle placed on feed May 24, with an expected finish date of Oct. 17) is a negative $36/head, according to the North American Institute for Beef Economic Research (NAIBER). This compared with a negative $65/head the week before. The lower and upper profit potential is a negative $284/head to a positive $213/head, vs. a negative $305/head to a positive $176/head last week.
The weekly margin includes: a 750-lb. steer; its average price at Monday’s Oklahoma City Stockyards sale; a Kansas feedlot location; interest rates that reflect general cattle financing terms; seasonally adjusted expected average daily gains, death loss and other feedlot inputs; projected corn costs during the projected feeding period, using Thursday’s corn futures closes; a projected live-cattle price at the end of the feeding period, using Thursday’s live cattle futures closes; a projected outweight of 1,250 lbs.
NAIBER’s risk analyzer calculates the risk associated with feeding cattle based on these and other inputs. As noted, some inputs will be updated each week while others, such as daily gain and death loss, will be adjusted on a seasonal basis. People wishing to calculate their own projected cattle feeding returns, using their own inputs, can do so by going to NAIBER's Cattle Feeding Return Risk Analyzer at www.naiber.org/cattleriskanalyzer.
NAIBER also posts historical data and two graphs of its weekly calculations. These can be found under the “expected Kansas feeding return” icon. Also available there is a link to a spreadsheet that contains some of the details of the calculated inputs.
Have a great Memorial Day Weekend (for those in the U.S.) and a good week,
Steve Kay