Despite the continued decline in negotiated cash fed cattle prices and wholesale beef values, more optimism returned to Cattle futures, helping lift cash and feeder cattle prices. Keep in mind, the week was one day shorter due to observation of Independence Day.
Nationwide, steers and heifers sold steady to $2/cwt. higher, according to the Agricultural Marketing Service (AMS).
Except for an average of 12¢ lower in the back contract, Feeder Cattle futures closed an average of $1.05 higher to week on Thursday (65¢ to $1.62 higher in spot Aug).
Dry conditions continue to expand, though, impacting some marketing decisions. According to the U.S. Drought Monitor, 45.42% of the continental United States was ranked as abnormally dry to extreme drought for the week of July 2. That was 35.46% more than the same time last year.
AMS analysts note that cattle are coming to town off dry summer grass or out of grow yards in droughty areas of the Southern Plains and Northern Plains. They add that cows are starting to come to market in Wyoming and western Nebraska. The same goes for parts of Colorado, per other reports.
According to the most recent Crop Progress report for the week ending June 28, 42% of pasture and range was rated in Good or Excellent condition, which was 33% less than the same time a year earlier. 26% was rated in Poor or Very Poor condition, compared to 7% at the same time last year.
Feed costs also took on a more bearish tone last week with USDA’s lower estimate for corn acres.
Corn acreage is projected at 92.01 million acres, in last week’s Acreage report. That would be 2.31 million acres more (+2.57%) than last year. However, the projection is about 5 million acres less than the initial outlook in USDA’s Prospective Plantings report that came out at the end of March. Acreage harvested for grain is forecast at 84.02 million acres, which would be 2.70 million acres more (+3.32%) than last year.
Corn futures closed an average of 24¢ higher through the front six contracts week to week on Thursday.
“The higher expected corn price has to enter into the decision making process for cattle feeders as they bid on feeder cattle,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “This one report does not mean the expected corn price will remain elevated moving through the next 12 months, but it does put another component of the overall cattle industry back into play.
“At the same time, cow-calf and stocker producers may have to reconsider their grain supplement plan if it is highly dependent on purchasing corn. The one bright side for many parts of the country is that precipitation has been adequate if not abundant, which continues to support forage production.”
Cull cow prices remain a relative bright spot, according to Josh Maples, Extension livestock economist at Mississippi State University. In the latest issue of In the Cattle Markets he explains slaughter cow prices in the Southern Plains averaged $57.84/cwt. over the past six weeks of available data, which is 19.5% above the same period in 2019.
Total cow slaughter so far this year is about par with 2019, with beef cow slaughter up about 2% and dairy cow slaughter down about 2%, according to Maples.
Fed Cattle Prices Steady to Lower
Negotiated cash fed cattle trade ended the holiday-shortened week steady to $2 lower on a live basis in the Southern Plains at $93-$95/cwt.; steady to $1 higher in Nebraska at $95-$96 and unevenly steady in the western Corn Belt at $96-$97. Dressed trade was $1 lower in Nebraska at $154-$155 and steady to $4 lower in the western Corn Belt at $152-$155.
Live Cattle futures closed an average of $2.38 higher week to week on Thursday ($1.37 higher to $3.32 higher in spot Aug).
Choice boxed beef cutout value was $2.82 lower week to week on Thursday at $205.44/cwt. Select was $1.17 lower at $198.76.
“With larger production available, packing plants continue to refill the pipeline and increase beef items to consumers,” say AMS analysts. “Beef and pork will have to find price levels to clear record production that will persist for several months.”
Although recent holidays supported beef demand, Griffith notes it was muted, compared to normal times, as the pandemic and social unrest kept some consumers closer to home. He adds that most beef product still must flow through the retail channel as many restaurants remain limited to drive-thru, curbside pickup and limited seating capacity.
“At the same time, sales that would have occurred at ball games or during vacation are practically non-existent,” Griffith says. “While all of this is happening, one also has to consider discretionary spending. Many consumers’ incomes have declined the past several months, which leaves them with few dollars to spend, which could mean less beef for some. Labor Day will wrap up the summer grilling season, and it may be the benchmark to know how the market is fairing.”
Friday to Friday Change
Weekly Auction Receipts
*Reflects volume for Monday through Thursday.
CME Feeder Index
|CME Feeder Index*||July 1||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$148.12||– $7.93|
|700-800 lbs.||$136.42||– $6.82|
|800-900 lbs.||$134.12||+ $1.89|
|500-600 lbs.||$151.47||+ $0.78|
|600-700 lbs.||$143.31||+ $1.72|
|700-800 lbs.||$134.06||+ $0.92|
|400-500 lbs.||$145.74||– $0.99|
|500-600 lbs.||$139.96||+ $0.07|
|600-700 lbs.||$132.15||+ $0.81|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||July 2 ($/cwt)||Change|
|Ch-Se Spread||$6.682||– $1.65|
|Feeder Cattle||July 2||Change|
|Jan ’21||$137.075||+ $0.650|
|Live Cattle||July 2||Change|
|Feb ’21||$109.750||+ $2.400|
|Mar ’21||$3.650||+ $0.256|
|Oil CME-WTI||July 2||Change|
|Jan ’21||$41.18||+ $1.61|
|Equity Indexes||July 2||Change|
|Dow Industrial Average||25827.36||+ 81.76|
|S&P 500||3130.01||+ 46.25|
|Dollar (DXY)||97.23||– 0.16|