By Cassie Fish, http://cassandrafish.com
The USDA released actual slaughter and carcass weight data today and for the first time in 2021, it contained good news. Steer carcass weights fell 6 pounds from the prior week to 888 pounds, 13 pounds below last year and 29 pounds above the 5-year average. Weights seasonally bottom June 1 typically.
The bigger news is that beef packing industry harvested 537k head, the largest fed slaughter since COVID-19, the prior high, 533k head, occurring in late June 2020. The 537k head compares with the all-time high post-Plainview, Texas plant closing of 549k head in March 2020 during the pandemic hoarding rally. In 2019, the largest fed kill was 542k head and in 2018, 540k head.
The question remains whether the industry can consistently perform at this level. So far, there is no proof it is possible. June will be a true test, as the three full weeks between June 7 and June 26 would typically be three of the largest fed slaughter weeks of any year.
The challenges with throughput are well advertised and grading and weight data prove front-end supplies are ample regardless of the optimism for smaller fed cattle supplies during the second half of 2021. This single issue will be with this industry until plants can commonly and easily perform needed hours on command.
Boxed beef prices have reached new highs yet again this week, this time boosted by the cyber-attack related production shortfall. Will boxed beef prices eventually correct? The answer is yes, while when and the how much are questions that remain elusively unanswerable.
Cash cattle prices are steady again this week, thanks to the packer and trade is a trickle each day. USDA reported volume as of this morning at 35k head. The on-line fed cattle auction reported no trade today.
CME cattle futures have traded lower most of the day after the big break Tuesday was followed by a blistering rally yesterday. Open interest continues to leak out of live cattle futures as more and more traders head for the door. Most active August LC rallied back to its 40 and 100-day moving average only to reject them by selling off today.
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