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Daily livestock report mar 28 2013

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  • 1. Sponsored by Vol. 11, No. 59 / March 28, 2013 Cattle futures were notably higher in yesterdays US STEER & HEIFER SLAUGHTER, JAN - JUL 000 HEADtrading although trade overnight was mixed. The nearby PRELIMINARY DATA BASED ON DAILY SLAUGHTER ESTIMATES - 7 DAY RUNNING TOTAL 650.0live cattle futures contract (April) closed yesterday at $127.35/cwt, JAN 11 - JUL 11 JAN 12 - JUL 12 JAN 13 - JUL 13140 points higher than the previous close while June added 182points to close at $122.95 and August added 140 points to close at 600.0$124.025/cwt. Feeder cattle futures also were higher, with Aprilfeeders up 180 points and May up 160 points. The surge in cattle 550.0prices follows cash prices that traded firm, with higher askingprices for cattle coming to market in the next couple of weeks. 500.0Packers have been running fairly light schedules for much of thispast month but the expectation is that with weather warming up 450.0and Lent behind us, slaughter should start to improve in April.Steer and heifer slaughter is currently running at a weekly pace of 4th of Julyabout 449,000 head per week (seven day total through Wed.), 400.0 New Year Memorial Daydown 6.2% compared to year ago levels. Cow and bull slaughter,on the other hand, is currently running almost 13% higher than a 350.0year ago. The surge in cattle prices at a time when boxed beef JAN FEB MAR APR MAY JUN JULvalues have been drifting lower will likely squeeze packer marginsin the very short term. So far boxed beef values have followed a $/cwt CHOICE BEEF CUTOUT, USDA, DAILY CLOSE, $/cwtsimilar pattern as they did last year (see chart). The cutout ap- 220.0proached a top of almost $200/cwt but it has now pulled back in 210.0the $190 area. The fact that Easter is earlier this year should 2012help the cutout rally earlier than it did a year ago. Retailers are 200.0 2013looking for post Easter features and some beef items are now 190.0priced notably lower than they were earlier this year (rememberApril LC was $137/cwt at the beginning of the year). Cold weath- 180.0 2011er across much of the US East Coast and parts of the Midwest so 170.0far has negatively impacted sales compared to last year whenweather in heavily populated areas was warmer. As weather 160.0improves, there should be some pent up demand that could under- 150.0 2010pin beef cut sales in April and May. The feedlot inventory alsoshowed that total supplies of cattle on feed remain limited (down 140.0almost 7% vs. year ago). 130.0 Retailers have been able to diversify to other pro- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dectein so far (whole bird chicken is at all time record highs) andturkey burgers are showing up at in fast food restaurants. But least so far, by more dairy cows coming to market than a year ago.the consumer preference for beef has not disappeared and going Milk prices have improved but feed costs will remain a concern forinto the grilling season, beef prices should see somewhat better the dairy industry at least until we have a better idea of how thisdemand than they have seen so far. Challenges remain on the year’s harvest will shape up. Some beef cow producers also contin-demand front, from slow growth in disposable incomes (some say ue to struggle with limited feed supplies and the sharp decline innegative growth), relative high rates of real unemployment and feeder cattle values clearly has undermined the profitability ofunderemployment to a growing gap in incomes. Export demand some herds. Drought conditions persist in a number of areas andalso remains finicky. Russia has stopped buying any US beef but the Panhandle bears watching as it is coming into the spring withsales to Japan appear to have improved. Normally, beef exports a significant moisture deficit. Bottom line: Tight beef suppliesalso tend to improve into the summer months. and improving spring demand should help support cattle and beef As noted above, cow slaughter rates continue to run well prices. Weather, as always, remains a wild card.above year ago levels. The increase continues to be driven, at The Daily Livestock Report is made possible with support from readers like you. If you enjoy this report, find if valuable and would like to sustain it going forward, consider becoming a contributor. Just go to www.DailyLivestockReport.com to contribute by credit card or send your check to The Daily Livestock Report, P.O. Box 2, Adel, IA 50003. Thank you for your support!The Daily Livestock Report is published by Steve Meyer & Len Steiner, Inc., Adel, IA and Merrimack, NH. To subscribe, support or unsubscribe visit www.dailylivestockreport.com. Copyright © 2013Steve Meyer and Len Steiner, Inc. All rights reserved.The Daily Livestock Report is not owned, controlled, endorsed or sold by CME Group Inc. or its affiliates and CME Group Inc. and its affiliates disclaim any and all responsibility for the informa oncontained herein. CME Group®, CME® and the Globe logo are trademarks of Chicago Mercan le Exchange, Inc.Disclaimer: The Daily Livestock Report is intended solely for informa on purposes and is not to be construed, under any circumstances, by implica on or otherwise, as an offer to sell or a solicita- on to buy or trade any commodi es or securi es whatsoever. Informa on is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied orpossible where projec ons of future condi ons are a empted. Futures trading is not suitable for all investors, and involves the risk of loss. Past results are no indica on of future performance.Futures are a leveraged investment, and because only a percentage of a contract’s value is require to trade, it is possible to lose more than the amount of money ini ally deposited for a futuresposi on. Therefore, traders should only use funds that they can afford to lose without affec ng their lifestyle. And only a por on of those funds should be devoted to any one trade because atrader cannot expect to profit on every trade.