Omaha corn is now more than $3.50/bu., feedlot gain costs are the highest in 10 years, and lighter cattle have flowed into feedlots the last few months. Normally such factors would mean lower fed slaughter weights, but feedlot weights are at record levels, says Dillon Feuz, Utah State University economist.
Writing on the Livestock Marketing Information Center Web site (www.lmic.info), Feuz says last week's 882 lbs. is the largest weekly average on record.
"This past year, the 5-market steer weight averaged 851 lbs., which was 16 lbs. above 2005, and 25 lbs. greater than the 2001-2005 average," Feuz says. "Late this fall, when weights typically decline, they did not. The December average for 2006 was 877 lbs., 36 lbs. heavier than the December average of the last five years.
Feuz attributes the continuing increase to several factors.
"Even with higher costs of gain, it may still be profitable to feed to these heavier weights, especially for those selling on a carcass weight basis," he says.
In addition, with fed cattle marketing at a loss most of the year, heavier finish weights allow feeders to spread the cost of high feeder-calf prices, or hold on in hopes of a rise in the cash market.
The added weight, however, puts more beef into the marketplace. "This year, for every 34 head sold there was the equivalent carcass weight of 35 head," he says.
Feuz is unsure of the effect of continued higher corn prices on the weights trend, or if recent severe weather will lower weights in the short term.
"But unless packers change the acceptable carcass weight range, I'm inclined to believe we must be nearing the upper end of where the average carcass weight can be to avoid major packer discounts for too heavy of a carcass," he says.
With an average steer weight of 882 lbs., more than a few of them had to exceed 1,000 lbs. of carcass weight, and many exceeded 950.
"Most packers use one of these two weights to start applying steep discounts to prices. When feedlots experience those sharp discounts, it is no longer economical to push to higher weights," he says.
-- Dillon Feuz, Livestock Marketing Information Center