Auction receipts continued lighter last week as sellers of calves and feeder cattle sort their options amid bearish COVID-19 markets.
Feeder steers and heifers sold $3-$7/cwt. lower, according to the Agricultural Marketing Service (AMS).
Even though equity markets surged higher on increasing optimism about COVID-19 reaching a peak in this country, helping to drag Cattle futures higher, it had an overanxious, unrealistic feel.
Feeder Cattle futures closed an average of $9.98 higher week to week on Thursday, ($8.85 to $11.75 higher).
Andrew P. Griffith, agricultural economist at the University of Tennessee emphasizes and illustrates COVID-19 market volatility, in his weekly market comments.
“In three weeks, the price of the May Feeder Cattle contract declined from $135 to less than $110/cwt. It then took just five days for the contract price to jump back over $130. The sudden increase in price was then followed by eight days of struggling prices that actually saw some contracts trade below $105 at the first of this week,” Griffith explains. “The market price will likely continue this rollercoaster ride, but it will not be a fun one for most participants. The plan for most producers should be to remain calm and keep doing what is being done. There is no reason to have any kneejerk reactions at this time.”
Fed Cattle Prices Sag
Negotiated cash fed cattle prices ended up $7 lower on a live basis last week at $105/cwt. in the Southern Plains, according to AMS. Dressed trade in Nebraska and the western Corn Belt was $7-$12 lower at $168. A light test was noted in all regions.
“Last week’s negotiated purchases of slaughter steers and heifers nationwide (28,923 head) was the second smallest volume reported since mandatory reporting started in 2001,” say AMS analysts.“Slaughter levels were lower than in recent weeks as several facilities have been affected by worker attendance. Cattle slaughter under federal inspection was estimated at 536,000 head for the week, 90,000 less than the previous week and 103,000 less than a year ago.”
Live Cattle futures closed an average of $6.33 higher week to week on Thursday, from $1.17 higher in spot Apr to $8.82 higher.
“The strong basis continues to provide cattle feeders incentive to market cattle in a timely manner,” Griffith says, noting the wide discount of futures to cash.
“It looks like cattle trading this week will be trading at least $10/cwt. higher than the April Live Cattle contract, while the June Live Cattle contract is trading $9 lower than the April price. It is hard to imagine live cattle cash trade dipping into the mid to upper $80 area in the next two months, but that is what the futures market is predicting,” Griffith says.
Boxed Beef prices continued to decline. Choice boxed beef cutout value was $6.51 lower week to week on Friday at $223.93/cwt. Select was $7.51 lower at $208.33.
“One would expect these prices to continue to moderate in the coming weeks as the beef supply chain continues to adjust to the current situation of more retail beef buying and less food service purchases,” Griffith says. “However, the change in consumption patterns of retail versus food service is not the only hurdle to overcome. There have been several packing facilities that are reducing production or shutting down due to the coronavirus, which will most likely reduce production.”
Smithfield Foods, Inc. announced Sunday that its Sioux Falls, SD facility–one of the largest pork processing facilities in the U.S.–will remain closed until further notice.
“The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply,” explained Kenneth M. Sullivan, Smithfield president and CEO.
According to various news sources, JBS is closing its beef packing plant in Greeley, CO through Tuesday of this week, for deep cleaning facilities and screening new workers. Reportedly, 36 JBS workers tested positive for COVID-19 infections through the end of last week.
“Unfortunately, COVID-19 cases are now ubiquitous across our country. The virus is afflicting communities everywhere. The agriculture and food sectors have not been immune,” Sullivan explained. “Numerous plants across the country have COVID-19 positive employees. We have continued to run our facilities for one reason: to sustain our nation’s food supply during this pandemic. We believe it is our obligation to help feed the country, now more than ever. We have a stark choice as a nation: we are either going to produce food or not, even in the face of COVID-19.”
Friday to Friday Change
Weekly Auction Receipts
| Apr. 10 | Auction | Direct |
Video/net |
Total |
|
112,900 (-66,200) |
63,600 (+42,100) |
4,600 (+4,100) |
181,100 (-20,000) |
CME Feeder Index
| CME Feeder Index* | Apr. 8 | Change |
| $116.79 | – $9.30 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Apr. 10 | Change |
| 600-700 lbs. | $143.18 | – $5.42 |
| 700-800 lbs. | $126.23 | – $6.33 |
| 800-900 lbs. | $117.17 | – $3.53 |
South Central
| Steers-Cash | Apr. 10 | Change |
| 500-600 lbs. | $149.65 | – $6.64 |
| 600-700 lbs. | $138.02 | – $4.15 |
| 700-800 lbs. | $120.23 | – $2.50 |
Southeast
| Steers-Cash | Apr. 10 | Change |
| 400-500 lbs. | $150.94 | – $5.07 |
| 500-600 lbs. | $139.16 | – $5.48 |
| 600-700 lbs. | $128.01 | – $3.39 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Apr.10 ($/cwt) | Change |
| Choice | $223.93 | – $6.51 |
| Select | $208.33 | – $7.51 |
| Ch-Se Spread | $15.60 | + $1.00 |
Futures
| Feeder Cattle | Apr. 9 | Change |
| Apr | $119.525 | + $8.850 |
| May | $118.950 | + $7.300 |
| Aug | $128.875 | + $11.225 |
| Sep | $129.375 | + $11.525 |
| Oct | $129.900 | + $11.750 |
| Nov | $129.950 | + $11.275 |
| Jan ’21 | $127.200 | + $8.950 |
| Mar | $128.450 | + $8.950 |
| Live Cattle | Apr. 9 | Change |
| Apr | $94.000 | + $1.175 |
| Jun | $84.375 | + $1.300 |
| Aug | $90.750 | + $6.350 |
| Oct | $96.650 | + $8.700 |
| Dec | $100.300 | + $8.825 |
| Feb ’21 | $104.275 | + $8.200 |
| Apr | $106.325 | + $8.175 |
| Jun | $99.850 | + $7.550 |
| Aug | $99.700 | + $6.700 |
| Corn | Apr. 9 | Change |
| May | $3.316 | – $0.018 |
| Jul | $3.366 | – $0.018 |
| Sep | $3.416 | – $0.004 |
| Dec | $3.506 | +$0.010 |
| Mar ’21 | $3.622 | +$0.010 |
| May | $3.690 | +$0.014 |
| Oil CME-WTI | Apr. 9 | Change |
| May | $22.76 | – $2.56 |
| Jun | $28.82 | + $0.77 |
| Jly | $32.00 | + $2.08 |
| Aug | $33.12 | + $2.21 |
| Sep | $33.58 | + $2.08 |
| Oct | $33.96 | + $1.96 |
Equities
| Equity Indexes | Apr. 9 | Change |
| Dow Industrial Average | 23719.37 | + 2305.93 |
| NASDAQ | 8153.58 | + 666.27 |
| S&P 500 | 2789.82 | + 262.92 |
| Dollar (DXY) | 99.56 | – 0.54 |