Exports boost profitability
Market (from page 1)
numbers since March of 2009, when a late-season snowstorm caused plant closings.
As demand seasonally improves each spring, the market typically sees beef production in the second quarter increase by about 300 million pounds, according to CME. The increase last year was just 148 million pounds, and this helped to provide solid support for the uptrend in futures trade. For the first time in at least 20 years, beef production will be down in the second quarter from the first quarter, 25 million pounds down, according to the recent supply/demand update from USDA.
Cash beef markets were higher across the board last week, with most all primal sections of the beef carcass as well as boneless beef showing price gains on Wednesday. “A combination of lighter production schedules and improving demand for not only middle meats, but now a few end cuts, is lending support to cutout values. [Last] week’s slaughter should remain around 600,000-610,000 head and this along with continued export business as well as domestic business that needs to deliver for first of March features is expected to keep the boxed beef market moving higher,” according to Vetterkind.
The boxed beef cutout value picked up some steam midweek and prices advanced one to two dollars on moderate trade volumes. The Choice cutout was at $189.38 and Select at $184.27. The Choice/Select spread was quoted at $5.11. The demand for ground beef is remarkably strong with 90 percent lean manufacturing beef trading at $212.11, and the 50 percent trim trading at $99.39. Cow beef cutout values were at $164.90 and dressed cow beef traded at $119.00. The slaughter cow market should be very strong as we move into spring. Slaughter cows are trading strong with the high yielding cows fetching up to $90 and slaughter bulls trading between $95 to $99/cwt.
Export sales remain decent with a reported 13,200 metric ton of beef sales the previous week. According to the U.S. Meat Export Federation, record beef export performance over the past year is one of the biggest factors driving producers’ positive outlook as the percentage of U.S. beef production exported (including variety meat) approached 15 percent and export value equated to more than $200 per fed steer or heifer slaughtered.
“Our outlook for international markets across the globe is really exciting at this time,” said Kevin Kester, a fifth-generation rancher from Parkville, CA, who chairs the National Cattlemen’s Beef Association’s Joint International Markets Committee. “I believe more and more producers across the nation are realizing the importance of our export markets and how they increase carcass value. For 2011, the value per steer and heifer slaughtered in the United States exceeds $200. That’s a huge boost to our profitability.”
Feeder cattle prices were steady to $3 higher, with calves trading $3 to as much as $7 higher. New historic all-time highs in the feeder index sent feeder cattle futures climbing again with the march feeder cattle contract at $156.62 and all deferred contract months showing strength as we move into summer and fall. Prices for lighter cattle pushed many 400 pound steers well into $200-225. A 750 pound feeder steer was selling for $156 on the south Plains. Areas in the northern Plains did see some signs of weakness, according to USDA reports.
Feeder cattle receipts were estimated at 287,500 head versus 348,300 head the prior week and 207,500 head last year.
“Replacement feeder cattle breakevens for fed cattle were in the range from $134- 140/cwt. If fed cattle prices decline, as is expected, cattle feeders are increasingly vulnerable to a price correction also. Many replacement feeders have a loss bid in as fed cattle exceeding $100 per head. Lower anticipated foraging cost for early spring are encouraging buyers to risk higher prices in belief of better gain costs on the ability of grass to cheapen levels and improve profit margin levels,” Gottschalk said.
Major grazing areas in Oklahoma and Kansas continue to receive moisture and grazing prospects are fairly bright.
Calf buyers were optimistic at the Torrington, WY, Livestock Commission the previous Wednesday with over 5,300 head on offer. Over 750 head of top quality 5 weight steers averaged 552 pounds at $197.61 with another 270 head flagged as fancy averaging 543 pounds at $203.78. An additional 500 head of fancy light 6 weight steers averaged 613 pounds at $186.68.
In the Washington/Oregon area, feeder cattle were steady in a light test. Trade was slow with good demand, especially for contracting of fall calves. The feeder supply included 57 percent steers and 43 percent heifers. Nearly 64 percent of the supply weighed over 600 pounds.
In Oklahoma, feeder cattle were $1-2 higher last week. Stocker cattle sold $2-4 higher and steer calves were $4-8 lower. Demand was extremely good for cattle heading to grass. Buyer attendance was very good despite the lighter receipts and Sunday snowstorm, with northwestern Oklahoma seeing as much as 7 inches in some areas. Supply included 61 percent over 600 pounds and 44 percent heifers. — WLJ