Despite futures pressure stemming from higher grain prices, cash feeder cattle mostly gained, perhaps with increased demand as more feedlots get cleaned up.
Steers and heifers sold steady to $5/cwt. higher, according to the Agricultural Marketing Service (AMS).
“Demand was reported as moderate to good across the Northern and Southern Plains as buyers were willing to put cattle back in pens even with the uptick in corn prices,” note AMS analysts.
Feeder Cattle futures closed an average of $1.90 lower week to week on Friday ($1.55 to $2.45 lower). Over the same period, Corn futures closed an average of 34¢ higher through the front three contracts, as weather challenges both planted acres and yield.
“Steer and heifer calf prices are now expected to fall by about 3% in 2019 relative to last year, equivalent to taking between $4-$7/cwt. out of 500-600 lb. calf prices in the Southern Plains,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. They peg the season-average corn price at $4.50/bu.
In his weekly market comments, Andrew P. Griffith, agricultural economist at the University of Tennessee points out Dec Corn futures are up a staggering 80¢ since the middle of May.
“The market is already pricing corn in such a way to ration its use over the next 12-15 months,” Griffith explains. “Understanding that fewer acres of corn have been planted this year and yields are expected to be negatively impacted by later planting, fewer bushels of corn will pressure cattle markets the next 12 months as corn prices remain elevated.”
At the same time, Griffith points out the excessive moisture challenging row crops is fueling forage growth.
“…feedlots will be looking for heavier cattle to place in the feedlot which means there will be incentive to add weight to cattle the next several months,” Griffith says.
Fed Cattle Soften in Sluggish Trade
Neither cattle feeders nor packers seemed possessed to swap cattle.
Negotiated cash fed cattle trade for the week appeared steady to either side of even in two regions through Friday afternoon. The only established prices reported by USDA during the week were for the western Corn Belt: mainly steady on a live basis at $114-$115/cwt. and steady to $2 higher in the beef at $184-$186. There were prices reported in other regions at mostly $1-$2 lower than the previous week but too few to trend. On Friday, the Texas Cattle Feeders Association reported its members trading at $112, which was $1 less than the previous week.
Both carcass weights and grading percentages continue to suggest that feedlot marketing is current, with no backlog building in the wings.
Live Cattle futures closed mixed week to week on Friday: an average of $1.08 higher through the front four contracts (52¢ to $1.85 higher) and then an average of 40¢ lower, except for 20¢ higher at the back.
In the latest World Agricultural Supply and Demand Estimates (WASDE), USDA analysts forecast $118/cwt. for the 5-area Direct fed steer price in the second quarter, followed by $110 in the third quarter and $114 in the fourth.
Year to date, AMS notes that heifer slaughter rate is 8.7% more than last year, with beef cow slaughter up 2.6%, perhaps suggesting further pressure on limited herd expansion.
“Preliminary heifer slaughter through May is about 50,000 head short of 4 million head,” say AMS analysts. “The last time January-to-May heifer slaughter eclipsed the 4 million mark was 2011.”
Choice boxed beef cutout value was 8¢ lower week to week on Friday afternoon at $222.23/cwt. Select was $4.16 lower at $202.76.
“Weaker beef demand may be the biggest threat to cattle and beef markets for the remainder of the year,” explained Derrell Peel, Extension livestock marketing specialist, in his weekly market comments. “Strong beef demand supported cattle and beef markets in 2017 and 2018, but there are signs that some weakness may be developing in beef demand in both domestic and international markets. While unemployment remains very low, other indications of weakness in the macro-economy are concerning and have led to reduced forecasts for U.S. economic growth in 2019; largely due to ongoing impacts of tariffs and trade disruptions. Relatively slow domestic income growth and higher prices for major consumer items, such as gasoline, combined with record large supplies of beef, pork and poultry may be limiting domestic beef demand going forward in 2019.”
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts June 14 |
Auction (head) (change) |
Direct (head) (change) |
Video-Net (head) (change) |
Total (head) (change) |
|
134,900 (-29,100) |
52,900 (+22,600) |
49,400 (+37,300) |
237,200 (+30,800) |
CME Feeder Index
| CME Feeder Index* | June 13 | Change |
| $134.25 | + 2.38 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | June 14 | Change |
| 600-700 lbs. | $163.77 | + $10.35 |
| 700-800 lbs. | $148.06 | + $4.87 |
| 800-900 lbs. | $135.86 | + $1.83 |
South Central
| Steers-Cash | June 14 | Change |
| 500-600 lbs. | $156.38 | + $1.61 |
| 600-700 lbs. | $146.89 | + $1.14 |
| 700-800 lbs. | $136.54 | + $1.76 |
Southeast
| Steers-Cash | June 14 | Change |
| 400-500 lbs. | $153.77 | + $2.22 |
| 500-600 lbs. | $143.51 | – $0.10 |
| 600-700 lbs. | $132.83 | – $0.62 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | June 14 ($/cwt) | Change |
| Choice | $222.23 | – $0.08 |
| Select | $202.76 | – $4.16 |
| Ch-Se Spread | $19.47 | + $4.08 |
Futures
| Feeder Cattle | June 14 | Change |
| Aug | $135.525 | – $1.725 |
| Sep | $135.800 | – $1.550 |
| Oct | $135.750 | – $1.625 |
| Nov | $135.875 | – $1.475 |
| Jan ’20 | $133.850 | – $1.975 |
| Mar | $133.075 | – $2.350 |
| Apr | $134.475 | – $2.025 |
| May | $134.750 | – $2.450 |
| Live Cattle | June 14 | Change |
| Jun | $108.775 | + $1.850 |
| Aug | $104.275 | + $0.975 |
| Oct | $105.475 | + $0.975 |
| Dec | $109.950 | + $0.525 |
| Feb ’20 | $114.100 | – $0.075 |
| Apr | $116.175 | – $0.300 |
| Jun | $108.925 | – $0.750 |
| Aug | $107.525 | – $0.475 |
| Oct | $110.000 | + $0.200 |
| Corn futures | June 14 | Change |
| Jul | $4.530 | + $0.374 |
| Sep | $4.582 | + $0.340 |
| Dec | $4.634 | + $0.298 |
| Mar ’20 | $4.674 | + $0.250 |
| May | $4.684 | + $0.228 |
| Jul | $4.6.80 | + $0.198 |
| Oil CME-WTI | June 14 | Change |
| Jul | $52.51 | – $1.48 |
| Aug | $52.77 | – $1.39 |
| Sep | $52.95 | – $1.32 |
| Oct | $53.00 | – $1.25 |
| Nov | $53.01 | – $1.18 |
| Dec | $52.98 | – $1.12 |
Equities
| Equity Indexes | June 14 | Change |
| Dow Industrial Average | 26089.61 | + 105.67 |
| NASDAQ | 7796.66 | + 54.56 |
| S&P 500 | 2886.98 | + 13.64 |
| Dollar (DXY) | 97.45 | + 0.89 |