Increased auction volume returned this week amid narrowly mixed trade as markets tried to sort through slowing beef production and volatile outside markets, in search of when and how the U.S. economy can reopen.
Nationwide, calves and feeders sold from $2 lower to $2/cwt. higher, according to the Agricultural Marketing Service (AMS).
“Grazing calves have started to see their demand wane this week as turnout dates have come and gone. Bigger feeders seem to have stabilized and found some footing,” say AMS analysts.
Except for 27¢ higher in spot Apr and 47¢ lower in Aug, Feeder Cattle futures closed an average of $1.35 lower week to week on Friday (32¢ lower at the back to $2.15 lower).
“The soft prices (calves and feeders) primarily stem from the cattle market assembly line backing up or bottlenecking at the packer level,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The reduced slaughter levels are backing finished cattle up in the feedlot, which means there is limited pen space for new feeder cattle placements. Since there is little space to put feeder cattle, feedlot managers are not willing to bid very hard to pull those cattle out of the country and into their yards because then they have more mouths to feed and nowhere to go with the animals that need to be leaving. This also puts a strain on the calf market because some stocker and backgrounding operations are at capacity and not able to move their heavy feeders to the feedlot.”
Normally, the monthly Cattle on Feed report published Friday would be hailed as more than bullish with 22.69% fewer placements in March than the previous year, 13.11% more marketings in the month and an on-feed inventory Apr. 1 (11.20 million head) 5.49% less. Of course, the notion of normal left a ways back.
Fed Prices Crumble
The choke point of packing capacity grew last week as COVID-19 sidelined workers. According to AMS, the past three weeks of cattle slaughter account for three of the four sparsest weeks since mandatory price reporting began in 2001.
USDA estimated last week’s cattle slaughter at 469,000 head, which would be 6.6% less than the prior week and 26.9% less than the same week a year ago. Year to date, estimated cattle slaughter is 1.9% less than in 2019 at 10.16 million head.
“A backlog of fed cattle at this level will be impossible to eliminate in a timely fashion, resulting in fed supplies remaining above slaughter capacity for several months,” say AMS analysts. “Anecdotes of fed cattle being pulled ahead for slaughter by two to three weeks–around the beginning to middle of February– have now disintegrated to being two to three weeks behind. That is what happens when daily slaughter for the five-day workweek averages 85,000 head compared to 120,000 head.”
“There are no indications this situation will get better moving through the month of May, but the hope is the economy begins to reopen and health is not an issue,” Griffith says. “These are the only two things this market cares about right now. If these two things do not change, then prices will remain depressed, as will cattle feeders’ attitudes. If the economy does start to reopen, then it will be hitting grilling season square in the nose, which should provide support for finished cattle.”
Negotiated cash fed cattle trade for the week through Friday afternoon was $5-$10 lower on a live basis in the Southern Plains at $100/cwt. in Kansas and $95-$100 in the Texas Panhandle. It was up to $10 lower in Nebraska and the western Corn Belt at $95. Dressed trade was from $8 lower to $10 higher at mostly $160, compared to the previous week’s light test.
For all of the gyrations, five-area daily weighted average direct negotiated prices through Thursday were mainly steady week to week with live steers at $96.95 and dressed steers at $154.27.
Live Cattle futures closed an average of $2.83 lower week to week on Friday ($1.50 lower at the back to $9.67 lower in spot Apr).
On the other side of the trade, wholesale beef values screamed higher as buyers scrambled for declining supplies on the cusp of grilling season.
Choice boxed beef cutout value was $54.38 higher week to week on Friday at $293.37/cwt. Select was $51.82 higher at $279.02.
“At this time, plant reductions are mostly resulting in some product disruptions and perhaps temporary shortages of fresh meat,” explained 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.”
Friday to Friday Change
Weekly Auction Receipts
| Apr.24 | Auction | Direct |
Video/net |
Total |
|
158,100 (+59,300) |
60,400 (+11,000) |
4,400 (-42,600) |
222,900 (+27,700) |
CME Feeder Index
| CME Feeder Index* | Apr. 23 | Change |
| $119.48 | + $3.73 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Apr. 24 | Change |
| 600-700 lbs. | $150.46 | – $2.96 |
| 700-800 lbs. | $134.32 | + $0.31 |
| 800-900 lbs. | $124.69 | + $1.05 |
South Central
| Steers-Cash | Apr. 24 | Change |
| 500-600 lbs. | $153.12 | – $0.02 |
| 600-700 lbs. | $137.28 | + $0.37 |
| 700-800 lbs. | $122.41 | + $1.15 |
Southeast
| Steers-Cash | Apr. 24 | Change |
| 400-500 lbs. | $149.06 | – $1.31 |
| 500-600 lbs. | $139.49 | – $1.44 |
| 600-700 lbs. | $128.79 | + $1.24 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Apr.24 ($/cwt) | Change |
| Choice | $293.37 | + $54.38 |
| Select | $279.02 | + $51.82 |
| Ch-Se Spread | $14.35 | + $2.56 |
Futures
| Feeder Cattle | Apr. 24 | Change |
| Apr | $119.800 | + $0.275 |
| May | $117.450 | – $1.825 |
| Aug | $126.400 | – $2.000 |
| Sep | $127.800 | – $2.150 |
| Oct | $128.925 | – $1.900 |
| Nov | $130.325 | – $0.950 |
| Jan ’21 | $128.975 | – $0.325 |
| Mar | $129.750 | – $0.325 |
| Live Cattle | Apr. 24 | Change |
| Apr | $84.975 | – $9.675 |
| Jun | $82.625 | – $3.675 |
| Aug | $88.900 | – $2.200 |
| Oct | $94.475 | – $1.650 |
| Dec | $98.425 | – $1.450 |
| Feb ’21 | $102.850 | – $1.650 |
| Apr | $105.175 | – $1.825 |
| Jun | $99.200 | – $1.850 |
| Aug | $99.500 | – $1.500 |
| Corn | Apr. 24 | Change |
| May | $3.156 | – $0.066 |
| Jul | $3.230 | – $0.062 |
| Sep | $3.274 | – $0.062 |
| Dec | $3.366 | – $0.068 |
| Mar ’21 | $3.492 | – $0.060 |
| May | $3.556 | – $0.064 |
| Oil CME-WTI | Apr. 24 | Change |
| May | $16.94 | – $8.09 |
| Jun | $21.22 | – $8.20 |
| Jly | $23.86 | – $7.34 |
| Aug | $25.71 | – $6.37 |
| Sep | $26.77 | – $5.94 |
| Oct | $27.67 | – $5.63 |
Equities
| Equity Indexes | Apr. 24 | Change |
| Dow Industrial Average | 23775.27 | – 467.22 |
| NASDAQ | 8634.52 | – 15.62 |
| S&P 500 | 2836.74 | – 37.82 |
| Dollar (DXY) | 100.29 | + 0.57 |