Early negotiated cash fed cattle trade on Monday was unevenly steady with the bulk of last week’s trade. Live prices were at $118/cwt. in the Southern Plains and Nebraska. Dresses sales in Nebraska and the western Corn Belt were at $178-$187.
Cattle futures closed mixed but mainly higher Monday as traders weigh short term beef demand against increasing supplies and lower boxed beef values.
Live Cattle futures closed mixed, an average of 70¢ lower through the front three contracts (5¢ to $1.42 lower) and then an average of 88¢ higher.
Feeder Cattle futures closed an average of $2.05 higher.
Choice boxed beef cutout value was $22.19 lower Monday afternoon at $341.15/cwt. Select was $23.24 lower at $316.83.
Corn futures closed mostly 2¢ to 3¢ lower.
Soybean futures closed mostly unchanged to 1¢ higher.
Major U.S. financial indices closed higher Monday, apparently on increasing optimism about reopening the economy and despite trade-quashing chatter between the U.S. and China, as well as curfews imposed in various cities, aimed at quelling recent violent protests.
The Dow Jones Industrial Average closed 91 points higher. The S&P 500 closed 11 points higher. The NASDAQ closed 62 points higher.
“Barring a major setback, it appears that beef markets are moving past the worst of the disruptions that have caused upheaval in recent weeks,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The last few weeks have revealed much about the nature of specialized beef supply chains and much about the variable demands for the wide variety of beef products. It has also revealed how market prices adjust to wild swings in beef product demand and supply conditions.”
Those disruptions were first spawned by the massive shift in consumer beef demand toward retail purchases and away from food service as the pandemic quarantine began. Then came the disruptions to beef packing and processing.
“Cattle slaughter and beef production decreased on a year-over-year basis for four consecutive weeks. The lowest point occurred the last week of April when total cattle slaughter was down 34.8% year over year. Beef production that same week was down 33.8% compared to the same week one year ago,” Peel says. “Significant recovery has occurred from that low with estimated cattle slaughter the week ending May 30 down 10.9% year over year. With cattle carcass weights increasing sharply due to delays in marketing fed cattle, estimated beef production last week was down just 7.6% year over year.”
Along the way, wholesale beef values skyrocketed overall, while price impacts varied across the carcass. For example, Peel points to increased demand for the Chuck and Round from March through April. Conversely, he explains prices for beef products dependent on food service demand, including many middle meat cuts, dropped in March before general shortages of products pushed prices higher in April and May.
“Additional dynamics are expected as food service continues a slow recovery and macroeconomic conditions continue to affect beef demand, but hopefully beef product markets are settling back into a much more stable situation and with typical product price relationships reestablished,” Peel says.