Most auctions were closed for the holiday last week, so there were no price trends for calves and feeder cattle. When sales start in the new year, they should receive support from recently stronger cash fed cattle prices and futures prices. Snugger front-end supplies and harsh winter weather in some cattle-feeding areas suggest that support should continue for a while.
Near-term wildcards continue to include volatile equity markets, tied to worries about rising interest rates and slowing global economic growth, as well as the government shutdown.
Feeder Cattle futures closed an average of $1.22 higher week to week on Friday (87¢ higher at the back to $1.72 higher in spot Jan).
Negotiated cash fed cattle trade remained undeveloped through Friday afternoon. Though too few to trend, there were a few live sales reported in the western Corn Belt on Thursday at $119.00-$121.50/cwt., which was about $1 higher than the previous week. A few dressed sales were reported steady at $190.
Live Cattle futures closed an average of $1.81 higher through the front four contracts ($1.00 to $3.20 higher), week to week on Friday and then an average of 63¢ higher.
Week to week, wholesale beef values maintained the previous week’s sharp gains. Choice boxed beef cutout value was at $214.41/cwt. Friday afternoon and Select was at $207.52.
Depending on your abacus, cattle prices this past year were unsurprising and mostly on par with the previous year. As long as weather and demand hold up, it’s hard to argue that prices will be much different in 2019.
The Livestock Marketing Information Center (LMIC) projected calf prices for the first quarter of 2019 at $168-$172/cwt., according to Glynn Tonsor, agricultural economist at Kansas State University, in December. Yearling prices were projected at $147-$150 and fed prices at $118-$121.
Given record large supplies of both beef and competing meats, holding the price line last year was due in large part to steady domestic demand and extraordinary international demand.
“Each of the major meats—beef, pork and poultry—are projected to reach record levels in 2018 and will combine to push total U.S meat production to a record level of 102.3 billion lbs., up 2.6% year over year,” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his mid-December market comments. “However, 2018 per capita meat consumption in the U.S. is projected at 218.7 lbs., up 1.0% year over year. The smaller increase in meat consumption compared to production is largely due to the net movement of meat offshore through meat exports.”
What’s more, odds favor additional beef cowherd expansion in 2018, albeit just a little.
LMIC analysts expect to see 0.2-0.4% growth as of January 1.
“The beef cow herd likely increased less than 1% year over year in 2018 to a projected Jan. 1, 2019 level of about 31.9 million head,” Peel says. “This may be the cyclical peak in herd inventory or very close to it. From the 2014 low of 29.1 million head, this cyclical expansion has increased the beef cow herd by 2.8 million head or 9.6% over five years. The last full cyclical herd expansion occurred in 1990-1996 resulting in an 8.8% herd expansion in six years.”
Moreover, Peel explains beef cowherd dynamics are finally returning to normal, following the unprecedented market forces that drove volatility during the past decade. That included drought-induced herd liquidation (2011-2013) that took more cows out of production than would otherwise be expected, followed by the recent rapid expansion.
Friday to Friday Change*
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index||Dec. 27||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$158.70||– $0.09|
|700-800 lbs.||$151.05||– $0.08|
|800-900 lbs.||$149.61||+ $0.50|
|500-600 lbs.||$161.42||+ $4.69|
|600-700 lbs.||$148.82||+ $3.35|
|700-800 lbs.||$146.02||+ $1.90|
|400-500 lbs.||$152.39||+ $4.88|
|500-600 lbs.||$144.34||+ $2.37|
|600-700 lbs.||$136.15||– $2.85|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Dec. 28 ($/cwt)||Change|
|Ch-Se Spread||$6.89||+ $0.34|
|Feeder Cattle||Dec. 28||Change|
|Jan ’19||$149.075||+ $1.725|
|Live Cattle||Dec. 28||Change|
|Feb ’19||$124.175||+ $1.475|
|Feb ’20||$118.250||+ $0.625|
|Corn futures||Dec. 28||Change|
|Mar ’19||$3.754||– $0.030|
|Mar ’20||$4.066||– $0.020|
|Oil CME-WTI||Dec. 28||Change|
|Equity Indexes||Dec. 28||Change|
|Dow Industrial Average||23062.27||+ 616.90|
|S&P 500||2485.73||+ 69.11|
|Dollar (DXY)||96.38||– 0.57|