Calf and Feeder Prices Continue Lower
Despite some recovery in Cattle futures, increasing beef production, trade tensions and grain price uncertainty continued to weigh on cash calf and feeder cattle markets.
Nationwide, steers and heifers sold $1-$5/cwt. lower, according to the Agricultural Marketing Service (AMS).
“Market reporters noted this week’s offerings were feeling the effects of the first hot spell of the year,” say AMS analysts. “Auction receipts lagged behind a year ago by 50,000 as analysts are scrutinizing the number of placements in May and June due to the unusually large placement number in April.”
Feeder Cattle futures recovered about 27% of the previous week’s steep losses, closing an average of $2.41 higher week to week on Friday (80¢ higher toward the back to $4.12 higher in spot Aug). That was thanks to strong gains Tuesday and Wednesday as Corn futures softened.
Corn futures closed an average of 11¢ lower through the front three contracts week to week on Friday. Keep in mind, the previous two weeks they were up an average of22¢higher through the front six contracts.
Monday’s Crop Progress report will likely drive near-term direction. The previous week, corn planting was record slow with just 67% of in the ground as of June 2, which was 29% less than last year and the 5-year average. Planting was even slower in most key corn states.
“Higher expected corn prices due to the inability to get corn planted is definitely a factor weighing negatively on the feeder cattle market, as are continued trade tensions,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “However, there are factors in the marketplace that should benefit the beef and cattle complex, including African Swine Fever, which is reducing the quantity of meat protein on the global market.”
Griffith also points to the easing of trade tensions with some nations, such as Canada and Mexico.
Recently threatened U.S. tariffs on Mexico—due to the flow of illegal immigrants through that nation—reportedly were suspended on Friday. If so, perhaps that paves the way for ratification of the U.S.-Mexico-Canada trade agreement.
In the meantime, the lack of trade deals continues to weigh on U.S. beef exports.
U.S. beef exports totaled 105,241 mt in April, down 5% year over year and export value was down only slightly at $674.2 million, according to data released by USDA and compiled by the USMEF.
Beef export value per head of fed slaughter in April averaged $305.61, which was 7% less than a year earlier.
Fed Cattle Prices Soften
Negotiated cash fed cattle trade ended up generally $2-$3 lower on a live basis last week at $112-$113/cwt. in the Southern Plains and at $114-$115 in Nebraska and the western Corn Belt. Dressed trade was also $2-$3 lower at $183-$184.
Except for $1.55 lower in spot Jun, Live Cattle futures closed an average of $1.06 higher week to week on Friday (22¢ to $1.57 higher).
“The story in the finished cattle market continues to be the strong basis where live cash prices are trading $5-$6 higher than June Live Cattle futures,” Griffith says. “For cattle feeders that hedged the sale of these cattle prior to April 23, the positive basis is a money-making proposition as the futures hedge will have protected against the huge futures price decline, and cattle feeders are capturing the value in the positive basis. At the same time, the positive basis provides good reason to stay current with marketings, which will keep pulling cattle through the system.”
So far, grading percentages and carcass weights suggest fed cattle marketing remains aggressive and current.
Although carcass quality in May was higher year over year with an average of 78.36% grading Choice and Prime, the average was 1.86% less month to month—compared to a decline of 0.84% the previous year.
As for carcass weights, after catching up and surpassing year-over-year levels for several weeks, average dressed steer weights sunk to 842 lbs. the week ending May 25, the lightest of the year. Though a seasonal decrease is unsurprising, dropping 7 lbs. from the previous week and 6 lbs. from the previous year speaks to heavy, timely marketing.
“Despite some good gains in Cattle futures, the previous week’s sharp break and plentiful supplies, with seasonal weakness coming for the summer months, still paints a bearish attitude,” say AMS analysts.
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts June 7 |
Auction (head) (change) |
Direct (head) (change) |
Video-Net (head) (change) |
Total (head) (change) |
|
164,000 (+72,800) |
30,300 (+7,900) |
12,100 (-6,000) |
206,400 (+74,700) |
CME Feeder Index
| CME Feeder Index* | June 6 | Change |
| $131.87 | – 0.60 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | June 7 | Change |
| 600-700 lbs. | $153.42 | – $7.85 |
| 700-800 lbs. | $143.19 | – $3.54 |
| 800-900 lbs. | $134.03 | – $5.65 |
South Central
| Steers-Cash | June 7 | Change |
| 500-600 lbs. | $154.77 | – $4.22 |
| 600-700 lbs. | $145.75 | – $1.88 |
| 700-800 lbs. | $134.78 | – $2.77 |
Southeast
| Steers-Cash | June 7 | Change |
| 400-500 lbs. | $151.55 | + $3.17 |
| 500-600 lbs. | $143.61 | – $1.03 |
| 600-700 lbs. | $133.45 | – $1.47 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | June 7 ($/cwt) | Change |
| Choice | $222.31 | – $0.90 |
| Select | $206.92 | – $0.77 |
| Ch-Se Spread | $15.39 | – $0.13 |
Futures
| Feeder Cattle | June 7 | Change |
| Aug | $137.250 | + $4.125 |
| Sep | $137.350 | + $3.275 |
| Oct | $137.375 | + $2.850 |
| Nov | $137.350 | + $2.350 |
| Jan ’20 | $135.825 | + $2.175 |
| Mar | $135.425 | + $2.650 |
| Apr | $136.500 | + $0.800 |
| May | $137.200 | + $1.025 |
| Live Cattle | June 7 | Change |
| Jun | $106.925 | – $1.550 |
| Aug | $103.300 | + $0.225 |
| Oct | $104.500 | + $0.600 |
| Dec | $109.425 | + $0.950 |
| Feb ’20 | $114.175 | + $1.400 |
| Apr | $116.475 | + $1.400 |
| Jun | $109.675 | + $1.575 |
| Aug | $108.000 | + $1.325 |
| Oct | $109.800 | + $0.975 |
| Corn futures | June 7 | Change |
| Jul | $4.156 | – $0.114 |
| Sep | $4.242 | – $0.118 |
| Dec | $4.336 | – $0.100 |
| Mar ’20 | $4.424 | – $0.090 |
| May | $4.456 | – $0.070 |
| Jul | $4.482 | – $0.054 |
| Oil CME-WTI | June 7 | Change |
| Jul | $53.99 | + $0.49 |
| Aug | $54.16 | + $0.52 |
| Sep | $54.27 | + $0.54 |
| Oct | $54.25 | + $0.53 |
| Nov | $54.19 | + $0.53 |
| Dec | $54.10 | + $0.55 |
Equities
| Equity Indexes | June 7 | Change |
| Dow Industrial Average | 25983.94 | + 1168.90 |
| NASDAQ | 7742.10 | + 288.95 |
| S&P 500 | 2873.34 | + 121.28 |
| Dollar (DXY) | 96.56 | – 1.05 |