Higher cash fed cattle prices and the extraordinary surge in wholesale beef values helped Cattle futures maintain most of the previous week’s sharp gains, despite midweek pressure from surging grain prices.
Nationwide, steers and heifers sold $1-$4/cwt. higher, according to the Agricultural Marketing Service (AMS).
“As the major feedstocks for cattle were sharply higher, buyers wanted to procure more thinner fleshed cattle that will have compensatory gain instead of a fleshier one that will not feed very efficiently,” say AMS analysts.
Feeder Cattle futures closed narrowly mixed, week to week on Thursday, from 35¢ lower to 45¢ higher. During the same period, Corn futures closed an average of 16¢ higher through the front six contracts, elevated by a surprising USDA Prospective Plantings report (see below).
Prices for lightweight cattle should be nearing the seasonal peak, according to Andrew P. Griffith, agricultural economist at the University of Tennessee.
“There is certainly room for prices to push higher the next three to four weeks, but the momentum is expected to slow, and prices will turn the other direction as summer nears,” Griffith explains, in his weekly market comments. “The yearling cattle market has started to creep higher with the advent of a strengthening futures market. Summer and fall Feeder Cattle futures contracts made about $8 gains in March before being slowed by the USDA planting intentions and grain stocks reports.”
Grain Futures Spike Higher
U.S. producers intend to plant more acres to corn and soybeans this year than in 2020, according to the Prospective Plantings report. However, estimates were around significantly less than pre-report expectations for both crops.
Producers surveyed across the United States intend to plant an estimated 91.1 million acres of corn in 2021. That’s 325,000 more acres than last year, but about 2 million acres shy of expectations.
Soybean growers intend to plant 87.6 million acres in 2021, up 5% from last year, but about 2.5 million acres shy of pre-report expectations by private analysts. If realized, this will be the third highest planted acreage on record.
Corn and Soybean futures were limit up on Wednesday.
Griffith notes continued strength in Feeder Cattle futures, in the face of the grain friendly report suggests cattle producers expect corn and soybean prices to moderate.
“This is very likely in that the prices being projected for corn and soybeans should pull more acres into production,” Griffith says. “An increase in acreage should result in increased total production and thus lower prices. At this point, this is all speculation. What is known is that some extremely favorable prices for selling corn, soybeans, and feeder cattle can be captured today by using the futures market or forward contracting. The alternative to capturing these prices is doing nothing and simply crossing days off the calendar.”
Fed Cattle Prices Gain
By the end of the week, live prices were $2 higher in the Southern Plains at $117/cwt., $2 higher in Nebraska at mostly $118 (some up to $121) and $3-$4 higher in the western Corn Belt at $119-$120. Dressed trade was $5 higher at $190.
“Cattle feeders are slowly gaining leverage, and packers once again have several extra dollars to play with as beef prices increase,” Griffith says. “This does not mean packers will go down without a fight, but fed cattle prices will continue to creep higher the next several weeks. Live Cattle futures are pricing the June contract at nearly a $2.50 premium to April and August at a $1.50 premium. If this price pattern were to materialize, it would be a contra-seasonal price movement for finished cattle.”
Week to week on Thursday, Live Cattle futures closed an average of $1.04 higher (47¢ to $1.47 higher).
Significant strength in outside markets help bolster beef market optimism. Although investors are leery of increased inflation and interest rates, the increased rate of COVID-19 vaccinations and apparently bottomless government coffers continue to underpin equity markets. The Dow Jones Industrial Average was 533 points higher, week to week on Thursday. The NADASQ closed 502 points higher. The S&P 500 was up 110 points.
Wholesale Beef Prices Climb
Choice boxed beef cutout value was $15.19 higher week to week on Friday at $252.85/cwt. Select was $19.20 higher at $246.97. That’s $22.86 higher for Choice over the last two weeks; $27.02 higher for Select.
“The two drivers of higher beef prices are likely restaurants increasing dining capacity and consumers continuing to use discretionary spending on their eating experience, since many do not feel comfortable traveling yet,” Griffith explains. “How these factors change as an increasing number of Americans get a coronavirus vaccine will be determined in coming months. Another boost to the beef market will be the return of fans to baseball stadiums. Stadiums may not be filled to capacity, but those who are there will likely be eating hamburgers and beef hotdogs.”
Week to Week Change
Weekly Auction Receipts
| Apr. 5 | Auction | Direct |
Video/net |
Total |
|
193,300 (-7,900) |
57,100 (+14,700) |
6,600 (-26,300) |
257,000 (-19,500) |
CME Feeder Index
Thursday through Thursday…
| CME Feeder Index* | Apr. 1 | Change |
| $140.63 | + $3.88 |
*Wednesday-to Wednesday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Apr. 5 | Change |
| 600-700 lbs. | $164.06 | + $4.07 |
| 700-800 lbs. | $148.25 | + $0.61 |
| 800-900 lbs. | $140.02 | + $1.36 |
South Central
| Steers-Cash | Apr. 5 | Change |
| 500-600 lbs. | $168.69 | + $3.36 |
| 600-700 lbs. | $155.00 | + $3.48 |
| 700-800 lbs. | $142.00 | + $2.38 |
Southeast
| Steers-Cash | Apr. 5 | Change |
| 400-500 lbs. | $165.92 | + $2.95 |
| 500-600 lbs. | $153.19 | + $1.55 |
| 600-700 lbs. | $142.27 | + $3.23 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Apr. 2 ($/cwt) | Change |
| Choice | $252.85 | + $15.19 |
| Select | $246.97 | + $19.20 |
| Ch-Se Spread | $5.88 | – $4.01 |
Futures
| Feeder Cattle | Apr. 1 | Change |
| Apr | $143.875 | – $0.350 |
| May | $149.225 | + $0.100 |
| Aug | $158.000 | – $0.125 |
| Sep | $158.625 | + $0.125 |
| Oct | $159.150 | + $0.250 |
| Nov | $159.300 | + $0.450 |
| Jan ’22 | $157.500 | + $0.400 |
| Mar | $155.050 | – $0.300 |
| Live Cattle | Apr. 1 | Change |
| Apr | $120.025 | + $0.475 |
| Jun | $122.550 | + $1.475 |
| Aug | $121.525 | + $1.150 |
| Oct | $124.625 | + $0.950 |
| Dec | $127.450 | + $1.100 |
| Feb ’22 | $130.150 | + $1.175 |
| Apr | $130.900 | + $1.150 |
| Jun | $125.000 | + $1.100 |
| Aug | $123.850 | + $0.750 |
| Corn | Apr. 1 | Change |
| May | $5.596 | + $0.132 |
| Jly | $5.452 | + $0.128 |
| Sep | $5.010 | + $0.184 |
| Oct | $4.844 | + $0.190 |
| Mar ’22 | $4.912 | + $0.178 |
| May | $4.944 | + $0.160 |
| Oil CME-WTI | Apr. 1 | Change |
| May | $61.45 | + $2.89 |
| Jun | $61.48 | + $2.91 |
| Jly | $61.35 | + $2.95 |
| Aug | $61.04 | + $2.97 |
| Sep | $60.62 | + $2.96 |
| Oct | $60.17 | + $2.95 |
Equities
| Equity Indexes | Apr. 1 | Change |
| Dow Industrial Average | 33153.21 | + 533.73 |
| NASDAQ | 13480.11 | + 502.43 |
| S&P 500 | 4019.87 | + 110.35 |
| Dollar (DXY) | 92.88 | + 0.35 |