Bearishness returned to cattle markets last week, tied to the hard fall in Cattle futures, borne by increasing pessimism about looming cattle supplies as some funds began to unwind long positions. Added pressure came from volatility in Lean Hog futures.
Even so, steers and heifers sold from $3 lower to $4/cwt. higher according to the Agricultural Marketing Service (AMS).
“Many markets from early to mid week were on the higher side, while later in the week markets followed the CME cattle complex in a downward trend,” say AMS analysts. They explain demand continued for summer turnout cattle as many auctions begin transitioning to summer schedules.
Feeder Cattle futures closed and average of $7.15 lower on Friday, compared to the previous Thursday ($3.80 lower at the back to $8.22 lower).
“…a downward movement in feeder cattle futures this week does not mean the market will continue to decline or stay at its current level,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “There are fundamental aspects of the market that could support the summer and fall contract months moving north of $160. However, the previous statement is not a solicitation to remain idle with a hope that the market will make a run. Producers should be considering their marketing alternatives and the cost of achieving their marketing objective.”
Fed Cattle Sell Steady to Lower
When all was said done last week, negotiated cash fed cattle prices were steady in the Southern Plains at $126/cwt., but $2-$3 less in the north at $125-$127 in Nebraska and $128 in the western Corn Belt. Dressed trade was $2-$3 lower at mostly $205 in Nebraska and mostly $205-$206 in the western Corn Belt.
Live Cattle futures closed an average of $5.79 lower on Friday, compared to the previous Thursday ($3.97 lower in spot Apr to $7.62 lower).
“It has been difficult the past two weeks to fully understand what is happening in the finished cattle market,” Griffith says. “The April contract, which will soon be pushed to the wayside, steadily increased from the low $120s to about $130 from November through the middle of March. Since that time, the contract moved from $126 to $128 and then declined to $124, all in a matter of two weeks. Similarly, the cash finished cattle market has moved in a similar pattern with no definitive reason for the gyrations. Maybe the Cattle on Feed report was an influencing factor or maybe it is a broader market signal related to demand. Either way, the market appears to have some uncertainty as is evident in the futures market. This does present opportunities.”
So far, weather-depressed carcass weights are helping support cattle prices in the face of growing numbers.
The average dressed steer weight in March was 11 lbs. less year over year at 867 lbs., according to USDA’s monthly Livestock Slaughter report. For January-March it was 8 lbs. less at 878 lbs. Average dressed heifer weight was 13 lbs. less year over year at 807 lbs. in March. It was 11 lbs. less for January to March at 817 lbs.
Cattle numbers will continue to increase as carcass weights catch up to normal.
For perspective, AMS analysts note that cattle slaughter through the middle of April of approximately 9.1 million head was 1% more than last year and 0.6% more than the three-year average. For the same period, steer slaughter was 3.5% less than last year and 3.6% less than the 3-year average, while heifer slaughter was 7.7% more than last year and 5.7% more than the three-year average.
Choice boxed beef cutout value was 66¢ lower week to week on Friday afternoon at $232.99/cwt. Select was $1.08 lower at $219.41.
“Boxed beef values have been doing very well but started to find some resistance this week as packers have plenty of product to sell,” say AMS analysts.
As well, Griffith points out U.S. beef and veal exports were 4.2% less year over year through the first two months of 2019.
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts Apr. 26 |
Auction (head) (change) |
Direct (head) (change) |
Video-Net (head) (change) |
Total (head) (change) |
|
193,900 (-5,500) |
73,300 (-13,100) |
1,300 (-44,100) |
268,500 (-62,700) |
CME Feeder Index
| CME Feeder Index* | Apr. 25 | Change |
| $144.24 | – 1.87 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Apr. 26 | Change |
| 600-700 lbs. | n/a | n/a |
| 700-800 lbs. | n/a | n/a |
| 800-900 lbs. | n/a | n/a |
South Central
| Steers-Cash | Apr. 26 | Change |
| 500-600 lbs. | n/a | n/a |
| 600-700 lbs. | n/a | n/a |
| 700-800 lbs. | n/a | n/a |
Southeast
| Steers-Cash | Apr. 26 | Change |
| 400-500 lbs. | n/a | n/a |
| 500-600 lbs. | n/a | n/a |
| 600-700 lbs. | n/a | n/a |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Apr. 26 ($/cwt) | Change |
| Choice | $232.99 | – $0.66 |
| Select | $219.41 | – $1.08 |
| Ch-Se Spread | $13.58 | + $0.42 |
Futures
| Feeder Cattle | Apr. 26 | Change |
| May | $143.950 | – $7.575 |
| Aug | $152.850 | – $7.825 |
| Sep | $153.850 | – $8.225 |
| Oct | $154.475 | – $7.925 |
| Nov | $154.875 | – $7.300 |
| Jan ’20 | $152.175 | – $7.475 |
| Mar | $150.450 | – $7.050 |
| Apr | $151.550 | – $3.800 |
| Live Cattle | Apr. 26 | Change |
| Apr | $124.550 | – $3.975 |
| Jun | $115.050 | – $7.625 |
| Aug | $112.650 | – $7.100 |
| Oct | $113.425 | – $6.675 |
| Dec | $117.475 | – $6.400 |
| Feb ’20 | $120.375 | – $5.700 |
| Apr | $121.725 | – $5.175 |
| Jun | $115.600 | – $4.700 |
| Aug | $114.300 | – $4.750 |
| Corn futures | Apr. 26 | Change |
| May | $3.512 | – $0.072 |
| Jul | $3.612 | – $0.060 |
| Sep | $3.694 | – $0.056 |
| Dec | $3.806 | – $0.056 |
| Mar ’20 | $3.954 | – $0.048 |
| May | $4.044 | – $0.038 |
| Oil CME-WTI | Apr. 26 | Change |
| May | $63.30 | – $0.77 |
| Jun | $63.38 | – $0.74 |
| Jul | $63.36 | – $0.75 |
| Aug | $63.23 | – $0.78 |
| Sep | $63.04 | – $0.79 |
| Oct | $62.80 | – $0.78 |
Equities
| Equity Indexes | Apr. 26 | Change |
| Dow Industrial Average | 26543.33 | – 16.21 |
| NASDAQ | 8146.40 | + 148.34 |
| S&P 500 | 2939.88 | + 34.85 |
| Dollar (DXY) | 98.05 | + 0.60 |