Negotiated cash fed cattle prices continued across a broad range last week. On a live basis, prices were steady to $5 lower in the Texas Panhandle at $115-$120/cwt., $5 less in Kansas at $115, steady to $7 less in Nebraska at $112-$120 and steady to $1 higher in the western Corn Belt at $115. Dressed prices were steady to $12 lower in Nebraska at $178-$190 and $5-$15 lower in the western Corn Belt at $175-$185.
Through Thursday, the five-area direct weighted steer price was $115.65/cwt. on a live basis and $183.30 in the beef. Week to week, that was $1.64 less and 45¢ less, respectively.
Cattle futures closed lower Friday, likely influenced by week-end and month-end position squaring. Never mind wonderments about how much packers are currently supporting fed cattle prices, relative to the lower levels suggested by fundamentals.
Live Cattle futures closed an average of $1.30 lower, (7¢ lower at the back to $1.75 lower in spot Jun).
Feeder Cattle futures closed an average of $1.01 lower (15¢ lower in spot Aug to $1.52 lower at the back).
Choice boxed beef cutout value was $6.22 lower Friday afternoon at $363.34/cwt. Select was $4.02 lower at $340.07.
Corn futures closed mostly 1¢ lower.
Soybean futures closed 4¢ to 6¢ lower through Jan ’21 and then mostly fractionally mixed to 1¢ lower.
Major U.S. financial indices closed mixed Friday, amid volatile trade related to rising political tensions between the U.S. and China.
The Dow Jones Industrial Average closed 17 points lower. The S&P 500 closed 14 points higher. The NASDAQ closed 120 points higher.
Disruptions in cattle slaughter, due to COVID-19, cloud the picture but analysts with the Livestock Marketing Information Center (LMIC) expect USDA’s July 1 Cattle report to reveal further declines in beef cow numbers.
“A smaller July 1 inventory will imply the same situation for Jan. 1, 2021. This would be the second consecutive year-on-year decline for the beef breeding herd that has only just begun this liquidation phase, which may now be sharper than previously expected,” say LMIC analysts, in the latest Livestock Monitor.
Before the pandemic began disrupting packing plants, LMIC analysts point out weekly beef cow harvest was running well ahead of year-ago levels. Beef cow slaughter was 2% to 20% below year-ago levels for the last seven weeks.
As for heifer slaughter, it’s 4% less so far this year, compared to 2019.
“Smaller heifer slaughter would normally imply, when discussing inventory, the possibility that this liquidation phase of the cattle cycle is over and producers are adding breeding type animals. There may be some individuals that are doing so, but the national picture suggests otherwise,” say LMIC analysts. “The decrease in heifer slaughter is misleading for a couple of reasons, but is not indicative of breeding herd growth. First, slaughter disruptions have caused data patterns that are atypical. The backlog of fed cattle is likely skewed towards more heifers; because of the lighter dressed weight, they can likely stay on feed longer than a heavyweight steer. Second, heifer slaughter should fall below a year ago after last year’s large numbers of heifers on feed and a smaller 2019 calf crop. Lastly, producers are cautious after a couple of years of negative returns for cow-calf operations. Many are not thinking of expanding. Adding worry for many in the West is the expanding drought conditions.”
Along with weather and forage availability, economics will continue to drive decisions about herd liquidation or expansion.
“Calf prices improved in recent weeks, but it remains to be seen what fall-weaned calves will bring. LMIC currently sees fourth-quarter calf prices as similar to a year ago,” explain LMIC analysts. “Expenses and feed costs are expected to be lower, and cull cow values have improved in some areas from last year. Under these assumptions, cow-calf returns should be better than the year before, but the outlook is still full of uncertainty.”