Negotiated cash fed cattle prices bounced higher last week, supported by increasingly positive supply fundamentals and rampant wholesale beef values.
Choice boxed beef cutout value was $19.32 higher week to week on Friday at $272.17/cwt. Select was $17.10 higher at $264.07. That’s a staggering $42.18 higher for Choice over the last three weeks and $44.12 higher for Select.
Analysts with the Livestock Marketing Information Center (LMIC) say further reopening the U.S. restaurant industry—the need to refill those pipelines—is likely behind the price rally’s trajectory, at least in part.
“…This rally is likely necessary to prepare the hospitality sector for re-boot but seems unlikely to have long term staying power,” say LMIC analysts, in the latest Livestock Monitor.
In established trade for the week, negotiated cash fed cattle prices were $3 higher on a live basis in the Southern Plains at $120, $5-$7 higher in Nebraska at $125, $5 higher in the western Corn Belt at $123-$125 and $4-$7 higher in Colorado (compared to two weeks earlier) at $120-$123. Dressed prices were $5-$7 higher at $195.
“Where the market moves from here will largely depend on who has leverage in the marketplace, and it is clear cattle feeders are gaining leverage they have not seen in many months. Look for finished cattle prices to gain a few more dollars through April,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.
The latest monthly World Agricultural Supply and Demand Estimates (WASDE) project the annual average five-area direct fed steer price at $116/cwt. That’s $1 higher than the previous month’s estimate, based on current price strength and firm demand. Projected average prices are $117 in the second quarter, $115 in the third quarter and $120 in the fourth quarter.
Week to week on Thursday, Live Cattle futures closed an average of $2.45 higher and then gave back an average of $1.10 on Friday.
WASDE projected 2021 beef production 60 million lbs. more than the previous month at 27.64 billion lbs.
Calf and Feeder Prices Gain
Based on weekly sales monitored by Cattle Current, calf and feeder cattle prices were mainly higher last week.
Week to week on Thursday, Feeder Cattle futures closed an average of $3.81 higher and then gave back an average of $1.55 on Friday.
“Yearling cattle prices have been slow to take off, but Feeder Cattle futures contract prices caught fire the past couple of weeks,” says Griffith. “Not only has the futures market provided optimism, cash feeder cattle prices have begun to increase. Cash yearling cattle prices are expected to continue increasing, given current Feeder Cattle futures.”
Corn futures took Friday’s WASDE report in stride, but the low and narrowing stocks to use ratio will maintain current price strength and likely price volatility.
USDA projected the 2020-21 U.S. corn price at $4.30/bu., which was unchanged from the previous month.
Significantly higher feed costs than last year will encourage feedlots to place cattle at heavier weights, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. In turn, stocker and backgrounders have more incentive to add more weight to cattle.
In his weekly market comment, Peel points out current weekly average cash corn prices are reported at $5.85/bu. in Dodge City, at $5.99/bu. in Garden City and at $6.01/bu. in the Texas Triangle. He explains those prices are 79-82% more than the lows in August.
Economic Growth and Inflation
Growing optimism about the economy fully reopening sooner than later lifted outside markets and bolstered Cattle futures last week.
“Thanks to the ingenuity of the scientific community, hundreds and millions of people are being vaccinated, and this is expected to power recoveries in many countries later this year,” explained Gita Gopinath, Chief Economist and Director of the Research Department at the International Monetary Fund (IMF). “We are now projecting a stronger recovery for the global economy compared with our January forecast.”
Specifically, IMF projects global GDP this year at 6.0% and 4.4% in 2022. That’s from the organization’s latest World Economic Outlook.
Domestically, analysts with CoBank’s Knowledge Exchange (CBKE) say consensus forecasts point to 7% U.S. GDP growth this year, the fastest rate of expansion since 1984. They note the U.S. economy continues to outperform expectations as stimulus funds fuel robust consumer spending.
On the other side of the ledger, those analysts expect inflation to increase.
“Any inflation that results from resurgent demand will be in addition to the base-effect inflation that we are certain to have in coming months,” according to the latest CBKE quarterly report. “Inflation is typically measured in year-over-year terms, and base effects occur when inflation readings are skewed because of price anomalies in the prior year. In 2020, prices for many goods and services dove in the middle months of the year as demand suddenly dropped. Those 2020 price declines will widen year-over-year inflation over the next couple of quarters, and new upward price pressure should push headline inflation above 3%. We expect this burst of inflation to be short-lived as the economy recalibrates, but we could experience inflation over 2% well into 2022.”
Week to Week Change
Weekly Auction Receipts
Last Available
| 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. 8 | Change |
| $141.79 | + 1.16 |
*Wednesday-to Wednesday for CME Feeder Index
Cash Stocker and Feeder
Last Available
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 | + $3.23 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Apr. 8 ($/cwt) | Change |
| Choice | $272.17 | + $19.32 |
| Select | $264.07 | + $17.10 |
| Ch-Se Spread | $8.10 | + $2.22 |
Futures
Thursday to Thursday
| Feeder Cattle | Apr. 8 | Change |
| Apr | $147.125 | + $3.250 |
| May | $151.600 | + $2.375 |
| Aug | $161.600 | + $3.600 |
| Sep | $162.325 | + $4.000 |
| Oct | $162.925 | + $3.775 |
| Nov | $163.225 | + $3.925 |
| Jan ’22 | $161.975 | + $4.475 |
| Mar | $160.100 | + $5.050 |
Thursday to Thursday
| Live Cattle | Apr. 8 | Change |
| Apr | $124.150 | + $4.125 |
| Jun | $125.025 | + $2.475 |
| Aug | $124.025 | + $2.500 |
| Oct | $127.025 | + $2.400 |
| Dec | $129.700 | + $2.250 |
| Feb ’22 | $131.950 | + $1.800 |
| Apr | $132.850 | + $1.900 |
| Jun | $127.525 | + $2.525 |
| Aug | $125.925 | + $2.075 |
Thursday to Thursday
| Corn | Apr. 8 | Change |
| May | $5.796 | + $0.200 |
| Jly | $5.620 | + $0.168 |
| Sep | $5.100 | + $0.090 |
| Oct | $4.946 | + $0.102 |
| Mar ’22 | $5.014 | + $0.102 |
| May | $5.054 | + $0.110 |
Thursday to Thursday
| Oil CME-WTI | Apr. 8 | Change |
| May | $59.60 | – $1.85 |
| Jun | $59.63 | – $1.85 |
| Jly | $59.52 | – $1.83 |
| Aug | $59.25 | – $1.79 |
| Sep | $58.89 | – $1.73 |
| Oct | $58.49 | – $1.68 |
Thursday to Thursday
Equities
| Equity Indexes | Apr. 8 | Change |
| Dow Industrial Average | 33503.57 | + 350.36 |
| NASDAQ | 13829.31 | + 349.20 |
| S&P 500 | 4097.17 | + 77.30 |
| Dollar (DXY) | 92.46 | – 0.56 |