Cattle Outlook: Consumers Want Animal Protein
Consumer demand for livestock products continues to be important in determining the pressure on livestock prices in the coming months.
By: Ron Plain and Scott Brown, University of Missouri
The June 2015 Restaurant Performance Index (RPI) was released today showing a 0.4 percent decline relative to the previous month. That is the lowest level for the RPI in nine months. The RPI still stands at 102.0 suggesting the expansion in the index has continued for a 28th straight month.
The University of Michigan's July 2015 consumer confidence index released today shows a decline from last month of 3.1%. The index in July stands at 93.1 which makes the index stand at its highest 8-month average since 2004.
The release of the prices received and prices paid indexes for livestock production in the latest Agricultural Prices report delivered this week is a reminder of the squeeze that has been occurring for the livestock sector in 2015. The prices received index for livestock production reached a peak of 135 percent (2011 base) in October 2014 and has fallen by 14 points to 121 percent in June 2015 as livestock prices have fallen. The decline in the prices paid index for the livestock sector is much less with only a 1 point drop over the same period. The prices received index for cattle has been the only bright spot with a 9 percentage point increase over the past 12 months.
Fed cattle prices were lower for the week. Through Thursday, the 5-area average price for slaughter steers sold on a live weight basis was $144.97/cwt, down $0.43 from last week and $18 lower than a year ago. The 5 area average dressed price for steers lost $3.03 this week to $229.00/cwt. This is $29.14 lower than last year's dressed price average.
Boxed beef cutout values were higher for the week recouping last week's decline. The cutout value for choice carcasses this morning was $233.27/cwt, up $2.27 from last Friday but $30.50 below a year ago. The select cutout was $229.69/cwt, resulting in a choice-select spread of $3.58/cwt.
Cattle slaughter came in at 532 thousand head this week, down 7 thousand from last week and 7.5% lower than the same week last year. Year to date cattle slaughter trails 2014 by 6.9%. The average dressed weight for steers slaughtered the week ending July 18 was 884 pounds, only 1 pound lighter than last week while still 15 pounds heavier than the same week last year.
This week's feeder cattle prices at Oklahoma City were $5 to $10 lower with high heat and humidity remaining problematic. Prices for medium and large frame #1 steers by weight group were: 400-450# $273-$284, 450-500# $258, 500-550# $254 550-600# $220-253, 600-650# $221.50-$241.50, 650-700# $208-$234.5, 700-750# $208.50-$228, 750-800# $208-$216, 800-900# $199-$210 and 900-1000#, $197-$198.50/cwt.
The August live cattle futures contract closed at $146.45/cwt today, up $3.48/cwt for the week. October fed cattle settled at $146.55/cwt and December at $148.05. The August feeder cattle contract gained $1.73 on the week to end at $211.48/cwt.
September corn closed today at $3.71/bu, down 21 cents from last Friday. December closed at $3.81.
