– Dr. Kenny Burdine, Livestock Marketing Specialist, University of Kentucky
Fed cattle markets have sustained their improvement since fall with fed cattle trading around $117 for the week ending January 6, 2017. This is nearly a $20 per cwt improvement from their fall lows (see chart below). CME© Feeder Cattle futures have risen by roughly the same amount over that time. In Kentucky, 550 lb M / L #1-2 steer calves have been moving in the $120’s with value-added groups selling in the $130’s. 750 lb M / L $1-2 steers in KY have traded in the mid-$110’s, again with higher quality groups about $10 per cwt higher.
Source: USDA-AMS, Livestock Marketing Information Center
Last month, we discussed price slides and some things that we are seeing with cattle prices by weight. Next month, I will be able to discuss USDA’s January 1 cattle inventory report and what it might mean for 2017. This month, I thought it might be interesting to re-visit harvest weights since this has been a major topic since fall of 2015.
The following chart shows steer dressed weights for the last couple of years. Note that dressed weights reached a high of 930 lbs in October of 2015. Using a 62% dressing percentage, this would equate to a 1,500 lb live steer. That same week in 2016, average steer dressed weight was 915 lbs, or a 1476 lb live steer. One can easily see from the charts that while weights have decreased some from 2015, they remain extremely high by historical standards.
From my perspective, there are likely three major reasons why harvest weights remain high. First, lower feed prices encourage more feeding holding everything else constant. That’s an easy one to understand and was clearly a factor for much of the last couple years. Secondly, lower feed prices likely worked in tandem with the general downward price trajectory for much of 2016. Put simply, this provided little incentive for feedlots to remain current and resulted in more days on feed. Finally, there were more feeder cattle placed on feed at heavier weights during 2016. The number of cattle placed on feed weighing more than 700 lbs was higher year-over-year in 2016 for each month January through August. Cattle that are placed on feed at heavier weights will tend to finish at heavier weights. This is a factor that will continue to at play through spring 2017.
Source: USDA-AMS and USDA-NASS, Livestock Marketing Information Center