Cash fed cattle prices continued to soften last week as beef production increases and uncertainty grows, relative to how soon the U.S. economy can reopen. At the same time, calf and feeder cattle prices held their own.
Nationwide, steers and heifer sold steady to $4/cwt. higher, according to the Agricultural Marketing Service (AMS). Those analysts note that the most advance came in the North Central region, with overall demand strongest for yearlings.
Except for an average of 11¢ lower in two contracts, Feeder Cattle futures closed an average of 51¢ higher to week on Friday.
“Calf prices will be hard-pressed to find support from now through November. At the same time, summer yearling cattle will be coming to market the next eight to 10 weeks. Prices for these cattle are generally strong during the summer months, which is largely due to cattle supply and when the cattle will be coming off feed, but it is also a factor of generally lower feed costs and good performance through summer and fall,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The problem this year is that placements of many cattle were delayed the past several months, which most likely means more animals to be placed in July, August, and September. This is further exacerbated by expectations of strong beef production moving through the third and fourth quarters of 2020, as well as the first quarter of 2021.”
Dry conditions and expanding drought will likely alter some marketing plans, too. According to the latest U.S. Drought Monitor (June 23), 43.74% of the continental U.S. was rated as abnormally dry (D0) to Extreme Drought (D3), versus 10.10% a year earlier.
Nationally, pasture and range conditions continue to erode, according USDA’s weekly Crop Progress report, with 43% of pasture and range rated in Good or Excellent condition for the week ending June 21. That was 2% less than the previous week and 25% less than last year. 25% was rated in Poor or Very Poor condition, compared to 8% at the same time last year.
“The fundamentals of the feeder cattle market provide little support to expect prices to move much in either direction,” Griffith says. “The failure of prices to reach beginning-of-the-year expectations will likely result in increased cow marketing and reduce the size of the breeding herd. This will result in positive price implications moving forward.”
Fed Cattle Prices Continue Decline
Negotiated cash fed cattle prices ended the week solidly lower, according to reports from the Agricultural Marketing Service. Regionally, live prices were $5-$7 lower in the Texas Panhandle at $93-$95, $5 less in Kansas at $95, $3-$7 lower in Nebraska at $95 and $1-$4 less in the western Corn Belt at $98. Dressed trade was $3-$7 less at $155-$156 in Nebraska and at $153-$156 in the western Corn Belt.
The five-area average direct fed steer price through Thursday was $96.24/cwt. on a live basis, which was $4.58 lower than the previous week and $14.34 less than the same period a year earlier. The average dressed steer price was $154.78, which was $5.96 less than the prior week and $24.58 less than a year earlier.
Except for unchanged to an average of 49¢ higher in the front four contracts, Live Cattle futures closed an average of 76¢ lower week to week on Friday.
“Finished cattle prices have converged to Live Cattle futures…The failure of the futures market to bend in the slightest is not a good sign for summer cattle marketing,” Griffith explains. “The June contract is rolling off, which makes the August contract the next destination, and it is trading ever so slightly higher than the June contract. The answer to this market turning around will most likely show up in finished cattle weights. Once finished cattle weights begin to decline, the price for finished cattle will find support. The reason a decline in finished weight will be the turnaround is because it will mark when we are finished working through the backlog of cattle.”
Wholesale Beef Values Lose Ground
Continued delays in the return of food service demand for beef—tied to ongoing closures and reduced restaurant capacity forced by COVID-19—and the recently higher retail beef prices continue to pressure wholesale beef values.
Choice boxed beef cutout value was $6.55 lower week to week on Friday at $207.17/cwt. Select was $5.06 lower at $198.85. Prices at the same time a year ago were $219.70 and $198.56, respectively.
“Wholesale boxed beef prices have dropped nearly back to pre-COVID-19 levels and may go lower into mid-summer as abundant third-quarter beef production could highlight potential recessionary demand weakness,” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his early-week market comments.
Even as cattle slaughter continues to recover from disruptions wrought by the pandemic, the backlog of fed cattle continues to add days on feed and pounds per carcass.
Year to date, Peel notes steer and heifer carcass weights averaged 27.4 lbs. heavier year over year. Carcasses were an average of 20.4 lbs. heavier in the first quarter; 36.7 lbs. heavier for April 1 to June 6.
USDA estimated total cattle slaughter for last week at 680,000 head, which would be 3.7% more than the previous week and 1.5% more than the same week last year. Total beef production under federal inspection was estimated at 562.3 million lbs., which would be 3.9% more than the previous week and 5.3% more than the same week last year.
“The expectation is that production in the third and fourth quarters of 2020 will far exceed beginning-of-the-year projections, “Griffith says. “The January World Agricultural Supply and Demand Estimates (WASDE) projected third and fourth-quarter beef production to be 6.88 and 6.93 billion lbs., respectively. The June report projected third and fourth-quarter beef production at 6.92 and 6.83 billion pounds, respectively. Essentially, the WASDE report indicates little to no change in production over the next six months, but heavier carcasses and maintaining current slaughter rates should result in year-over-year increases in beef production.”
For January through May, 7.4% fewer fed steers and heifers were slaughtered, while federally inspected beef production was only 3.4% less, according to USDA’s monthly Livestock Slaughter report. That was with 0.8% less total cow slaughter.
Friday to Friday Change
Weekly Auction Receipts
| June 26 | Auction | Direct |
Video/net |
Total |
|
155,900 (-4,500) |
55,500 (+8,500) |
60,600 (+50,900) |
271,500 (+54,900) |
CME Feeder Index
| CME Feeder Index* | June 25 | Change |
| $130.04 | + $2.03 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | June 26 | Change |
| 600-700 lbs. | $156.05 | + $3.19 |
| 700-800 lbs. | $143.24 | + $5.99 |
| 800-900 lbs. | $132.23 | + $3.85 |
South Central
| Steers-Cash | June 26 | Change |
| 500-600 lbs. | $150.69 | + $2.47 |
| 600-700 lbs. | $141.59 | + $0.99 |
| 700-800 lbs. | $133.14 | + $1.34 |
Southeast
| Steers-Cash | June 26 | Change |
| 400-500 lbs. | $146.73 | – $1.02 |
| 500-600 lbs. | $139.89 | + $0.31 |
| 600-700 lbs. | $131.34 | + $0.78 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | June 26 ($/cwt) | Change |
| Choice | $207.17 | – $6.55 |
| Select | $198.85 | – $5.06 |
| Ch-Se Spread | $8.32 | – $1.49 |
Futures
| Feeder Cattle | June 26 | Change |
| Aug | $132.600 | + $0.050 |
| Sep | $133.775 | – $0.100 |
| Oct | $134.725 | – $0.125 |
| Nov | $135.675 | + $0.100 |
| Jan ’21 | $135.225 | + $0.375 |
| Mar | $134.300 | + $0.300 |
| Apr | $135.275 | + $0.600 |
| Aug | $136.650 | + $1.650 |
| Live Cattle | June 26 | Change |
| Jun | $94.700 | -0- |
| Aug | $95.400 | + $0.625 |
| Oct | $98.850 | + $0.625 |
| Dec | $102.850 | + $0.225 |
| Feb ’21 | $107.275 | – $0.525 |
| Apr | $109.875 | – $1.025 |
| Jun | $103.650 | – $0.775 |
| Aug | $103.050 | – $0.725 |
| Oct | $105.900 | – $0.750 |
| Corn | June 26 | Change |
| Jly | $3.170 | – $0.154 |
| Sep | $3.192 | – $0.180 |
| Dec | $3.252 | – $0.200 |
| Mar ’21 | $3.366 | – $0.200 |
| May | $3.444 | – $0.186 |
| Jly | $3.510 | – $0.166 |
| Oil CME-WTI | June 26 | Change |
| Aug | $38.49 | – $1.34 |
| Sep | $38.65 | – $1.28 |
| Oct | $38.80 | – $1.22 |
| Nov | $38.94 | – $1.16 |
| Dec | $39.07 | – $1.12 |
| Jan ’21 | $39.19 | – $1.08 |
Equities
| Equity Indexes | June 26 | Change |
| Dow Industrial Average | 25015.55 | – 855.91 |
| NASDAQ | 9757.22 | – 188.90 |
| S&P 500 | 3009.05 | – 88.69 |
| Dollar (DXY) | 97.50 | – 0.16 |