Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, according to the Agricultural Marketing Service (AMS). There were a few dressed trades reported in Nebraska and the western Corn Belt at $155/cwt., but too few to trend. The price there last week was at $168. Given the surge in wholesale beef prices this week, some are betting on at least steady money.
Choice boxed beef cutout value was $5.34 higher Thursday afternoon at $235.87/cwt. Select was $3.76 higher at $225.98. That’s $10.01 more for Choice since Monday and $14.58 more for Select.
The average steer dressed weight for the week ending Apr. 4 was 889 lbs., which was 2 lbs. lighter than the previous week, but 24 lbs. heavier than the prior year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 825 lbs., the same as the prior week but 21 lbs. heavier than the same week last year.
Cattle futures closed higher Thursday, building on stability from the previous session. Trade and open interest continued to creep higher.
Weekly beef export Sales (Apr. 3-9) reported by USDA’s Foreign Agricultural Service were also supportive. Net sales of 20,200 metric tons (mt) reported for 2020 were up 28% from the previous week and 16% from the prior four-week average. Increases came primarily from Japan, South Korea, Hong Kong, China and Taiwan.
Live Cattle futures closed an average of 92¢ higher (70¢ higher to $1.65 higher).
Feeder Cattle futures closed an average of $1.97 higher ($1.42 higher at the back to $2.90 higher toward the front).
Corn futures closed mostly 1¢ to 2¢ lower.
Soybean futures closed 5¢ to 6¢ lower through Mar ’21 and then 3¢ to 4¢ lower.
Major U.S. financial indices wobbled higher Thursday as investors balanced negative economic impact from COVID-19 with hopefulness that plans are forthcoming for the nation to get back to work.
The Dow Jones Industrial Average closed 33 points higher. The S&P 500 closed 16 points higher. The NASDAQ closed 139 points higher.
“As fed cattle prices fall and feedlot margins decline, feedlot operations will likely reduce placements and reduce bids for feeder calves,” say analysts with USDA’s Economic Research Service (ERS), in the monthly Livestock, Dairy and Poultry Outlook. “Relatively good pasture conditions might allow producers to keep cattle on grass and other pasture until prices begin to recover. To that end, these calves will likely be placed in feedlots at heavier weights, and expected average slaughter weights will be higher. Recent price data and expectations of weaker feedlot demand underpins a decrease in this year’s expected feeder calf prices.”
ERS projects the annual average feeder steer price (basis Oklahoma City) at $130.50/cwt., which would be $11.73 less (-8.25%) than in 2019. Average price in the first quarter of this year was $136.42. Prices are forecast at $123 in the second quarter, $128 in the third quarter and $135 in the fourth quarter.
“Slower demand and potentially slower rates of slaughter are expected to pressure cattle prices. However, prices are expected to improve through the rest of the year but remain well below year-ago levels,” say ERS analysts.
ERS projects the annual fed steer price (five-area direct) at $111/cwt. this year, which would be $5.78 less (-4.95%) than last year. Average fed steer price in the first quarter of this year was $118.32. Prices are forecast at $105 in the second quarter, $109 in the third quarter and $112 in the fourth quarter.
With decreased cattle feeding returns, uncertainty and feedlot placements in mind, ERS reduced projections for beef production in the third and fourth quarters. However, ERS analysts also say increased non-fed cattle slaughter and higher average dressed weights will partly offset the reduction in fed cattle.