Slowing beef production took a toll on cash fed cattle prices last week, while putting the fire beneath wholesale beef values.
There were only 16,520 head confirmed fed steer and heifer trades last week, compared to 112,499 the same week last year, according to the Agricultural Marketing Service (AMS).
The AMS five-area direct average weekly weighted price for steers was $102.28/cwt. on a live basis, which was $2.72 less than the prior week. In the beef, steers traded $10.82 less at $157.18.
On the other end, Choice boxed beef cutout value was $9.39 higher Monday afternoon at $248.38/cwt. Select was $10.79 higher at $237.99 (see below).
Cattle futures softened Monday with pressure from slowing beef production and outside markets.
Live Cattle futures closed an average of 68¢ lower (30¢ to $1.20 lower).
Feeder Cattle futures closed an average of 77¢ lower (7¢ lower toward the back to $2.00 lower toward the front).
Corn futures closed 5¢ to 6¢ lower, except for 8¢ and 7¢ lower in the front two contracts.
Soybean futures closed 4¢ to 6¢ lower through Jan ’21 and then mostly 2¢ to 3¢ lower.
Major U.S. financial indices closed lower Monday, rattled by a historic spot-month rout of crude oil futures.
May WTI Crude Oil futures, which expires Tuesday, closed at -$37.63. That’s not a misprint. It closed at -$37.63. The next spot month, Jun, closed $58.06 higher at $20.43, but $4.60 lower than the previous session. Plentiful supplies, anemic demand and storage costs all contribute to the lack of overall buyer incentive.
The Dow Jones Industrial Average closed 592 points lower. The S&P 500 closed 51 points lower. The NASDAQ closed 89 points lower.
“At this time, plant reductions are mostly resulting in some product disruptions and perhaps temporary shortages of fresh meat,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly comments. “Barring a catastrophic combination of plant closures or extended periods of plant disruptions, significant shortages of meat are not expected. However, the combination of processing disruptions and the continuing challenges of supply chain disruptions means that consumers will likely experience limited meat supplies and selection in grocery stores in the coming weeks.”
For perspective, Peel explains estimated cattle slaughter last week was 502,000 head, which was 6.3% less than the prior week and 21.8% less than the same week a year earlier. The previous week’s slaughter of 536,000 head was also significantly lower. Until then, for the first 14 weeks of the year, he notes cattle slaughter averaged 634,300 head per week, which was 4.3% more year over year.
“Total beef production in 2020 is still projected at a record level over 27 billion lbs., but the timing during the year is more volatile and somewhat choppy,” Peel says.