Calf prices continued to move contra-seasonally last week, seeking post-COVID fundamental levels, while strong demand continued for yearlings, with more optimism for fed cattle values.
Nationwide, steers and heifers sold steady to $4/cwt. higher, with the most advance on yearlings weighing more than 800 lbs., according to the Agricultural marketing Service (AMS).
“Calf prices are holding their own, and this is most likely due to how low prices were in the spring. Thus, it is not that calf prices are strong. They are simply trying to find where they should be, given today’s market,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “This class of cattle will start to see some pressure towards the end of summer and moving into the fall months.”
As for feeder cattle, Griffith says there is plenty of market optimism, but suggests, “Producers should take advantage of the marketing opportunity being made available to them right now. If the cattle will make money with a sale today, then move them. If the cattle need a few more days of growing, then try to forward contract the cattle.”
Feeder Cattle futures closed an average of $3.34 higher week to week on Friday, supported by the outlook for favorable corn prices.
“With improving corn conditions at this time of year, yields will no doubt improve, keeping the corn market under pressure, regardless of demand,” say AMS analysts. “Big crops usually get bigger and yields will be no exception. This makes it hard to convince anyone, especially farmer-feeders, that we will have any corn production problems. Thoughts that the size of the corn crop will overshadow demand has many producers willing to walk a lot of corn to town.”
Corn crop progress is ahead of last year and the five-year average, with 72% rated in Good or Excellent condition, in the USDA Crop Progress report for the week ending July 26.
Corn futures were an average of 7¢ lower through the front six contracts, week to week on Friday.
Griffith also notes demand continues to be contra-seasonally strong for packer cows and bulls. “This is likely due to the demand for lean grinding beef that has skyrocketed during the COVID-19 pandemic as consumers are pulling ground beef off meat counter shelves rapidly,” he says.
Fed Cattle Prices Edge Higher
Negotiated cash fed cattle prices ended the week generally $1-$2 higher on a live basis at $97/cwt. in the Southern Plains, $100 in Nebraska, $98 in Colorado and steady at $101-$102 in the western Corn Belt. Dressed prices were $2 higher at $160.
Through Thursday, the average five-area direct weighted steer prices was $98.49/cwt. on a live basis, which was $1.26 more than the previous week, but $15.48 less than the same time last year. The average dressed steer price of $160.02 was $1.92 higher than the previous week, but $24.49 less than the previous year.
There are still plenty of backlogged market-ready fed cattle to work through, but it appears progress is being made, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.
“The calculated estimates of cattle on feed over 120 days are still very large compared to last year, but the difference has decreased by some 160,000 head since May,” Peel says, referring to the latest monthly Cattle on Feed report. “It appears that the backlog is decreasing but a sizable number of cattle remain to be cleaned up before feedlots will be current.”
Estimated total cattle slaughter for the week ending Aug. 1 was 638,000 head, which was 8,000 fewer than the previous week, but 5,000 head more than the same week last year. Year-to-date estimated total cattle slaughter of 18.4 million head is 1.02 million head fewer (-5.26%) than last year.
Live Cattle futures closed an average of $1.81 higher week to week on Friday. Along with firming wholesale beef values, support included a more positive weekly export outlook. U.S. beef export net sales for the week of July 23 totaled 29,500 metric tons (mt)—a market year high—up 89% from the previous week and up 81% from the previous four-week average. That’s according to the U.S. Export Sales report from USDA’s Foreign Agricultural Service.
AMS analysts note the weaker U.S. dollar is helping exports, with the dollar index at its lowest level in two years.
“At this point in the game, it would appear the summer low is in for finished cattle. That likely means a slow grind to higher prices, because the Labor Day holiday is the only grilling holiday remaining and December is several months down the road,” Griffith says. “It is tough to predict how strong this market will be, but there is a chance of reaching $115 in December.”
Wholesale Beef Values Firm
Choice boxed beef cutout value closed higher week to week for the second consecutive week, suggesting the ebb is established and the market will proceed along more fundamental lines.
Choice boxed beef cutout value was $1.49 higher week to week on Friday at $203.26/cwt. Select was 74¢ lower at $189.39.
“Hopefully, price levels should be attractive for retail interest and to consumers with some of the lowest beef prices seen for the month of July,” say AMS analysts.
The average dressed steer weight the week ending July 18 of 899 lbs. was 3 lbs. less than the prior week but 33 lbs. more than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 829 lbs. was the same as a week earlier but 34 lbs. heavier than the prior year.
“Federally inspected beef production has been above year-ago levels since the second week of June, while federally inspected cattle slaughter is down nearly 70,000 head over the same timeframe, compared to last year,” Griffith explains. “The increase in beef production stems from heavier cattle that spent more days on feed than was anticipated. However, it is not only total beef production that is being influenced by more days on feed. The increased number of days on feed is likely the reason more cattle are grading Choice.”
Friday to Friday Change
Weekly Auction Receipts
| July 31 | Auction | Direct |
Video/net |
Total |
|
136,100 (+8,000) |
48,500 (-31,000) |
400 (-96,200) |
185,000 (-119,200) |
CME Feeder Index
| CME Feeder Index* | July 30 | Change |
| $138.58 | – $0.85 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | July 31 | Change |
| 600-700 lbs. | $153.58 | – $9.14 |
| 700-800 lbs. | $145.23 | – $3.79 |
| 800-900 lbs. | $140.86 | – $0.55 |
South Central
| Steers-Cash | July 31 | Change |
| 500-600 lbs. | $154.22 | + $1.41 |
| 600-700 lbs. | $148.10 | + $3.00 |
| 700-800 lbs. | $140.20 | – $0.28 |
Southeast
| Steers-Cash | July 31 | Change |
| 400-500 lbs. | $148.82 | + $1.98 |
| 500-600 lbs. | $139.90 | + $0.96 |
| 600-700 lbs. | $134.26 | + $2.18 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | July 31 ($/cwt) | Change |
| Choice | $203.26 | + $1.49 |
| Select | $189.89 | – $0.74 |
| Ch-Se Spread | $13.37 | + $2.23 |
Futures
| Feeder Cattle | July 31 | Change |
| Aug | $144.675 | + $2.625 |
| Sep | $146.225 | + $3.475 |
| Oct | $145.650 | + $3.850 |
| Nov | $146.825 | + $4.150 |
| Jan ’21 | $144.600 | + $3.575 |
| Mar | $143.350 | + $3.175 |
| Apr | $144.575 | + $3.250 |
| May | $145.050 | + $2.625 |
| Live Cattle | July 31 | Change |
| Aug | $102.825 | + $1.500 |
| Oct | $107.875 | + $2.775 |
| Dec | $111.550 | + $2.225 |
| Feb ’21 | $114.550 | + $2.100 |
| Apr | $115.850 | + $1.875 |
| Jun | $109.950 | + $1.500 |
| Aug | $108.700 | + $1.400 |
| Oct | $110.575 | + $1.050 |
| Dec | $113.625 | + $1.875 |
| Corn | July 31 | Change |
| Sep | $3.160 | – $0.102 |
| Dec | $3.270 | – $0.080 |
| Mar ’21 | $3.382 | – $0.078 |
| May | $3.460 | – $0.070 |
| Jly | $3.522 | – $0.062 |
| Sep | $3.554 | – $0.042 |
| Oil CME-WTI | July 31 | Change |
| Sep | $40.27 | – $1.02 |
| Oct | $40.57 | – $0.88 |
| Nov | $40.91 | – $0.73 |
| Dec | $41.22 | – $0.60 |
| Jan ’21 | $41.49 | – $0.51 |
| Feb | $41.75 | – $0.43 |
Equities
| Equity Indexes | July 31 | Change |
| Dow Industrial Average | 26428.32 | – 41.57 |
| NASDAQ | 10745.28 | + 382.10 |
| S&P 500 | 3271.12 | + 55.49 |
| Dollar (DXY) | 93.46 | – 0.89 |