“Barring a major setback, it appears that beef markets are moving past the worst of the disruptions that have caused upheaval in recent weeks,” said Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his early-weekly market comments.
Nationwide, steers and heifers sold from $1 lower to $2/cwt. higher, according to the Agricultural Marketing Service (AMS). Regional average calf and feeder cattle prices for the week were within spitting distance of year-over-year levels, the closest since the end of February, according to the National Weekly Feeder and Stocker Cattle Summary.
After $1.17 lower and 27¢ lower in the front two contracts, Feeder Cattle futures closed an average of 85¢ higher week to week on Friday (5¢ higher to $1.22 higher at the back).
Surging equity markets tied to the reopening of the nation’s economy provided overall support.
“It’s too soon to talk too much about markets returning to normal, but the steady improvements associated with the packing industry facing fewer obstacles is a relief (see below),” said Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets from the Livestock Marketing Information Center.
From the lows of the year, Koontz points out: the five-area weighted average fed steer price is up about $15 at $115/cwt.; 7 to 8-weight feeder prices are up about $15 to $135; 4 to 5-weight calf prices are up about $8 to $170.
“There still remains several unanswered questions in the cattle market moving forward, but price levels for feeder cattle have improved to a point where producers were comfortable marketing some stock,” explained the AMS reporter on hand for Tuesday’s Kingsville Livestock Auction in Missouri, where calves sold steady to $6 lower and yearlings traded steady to $5 higher.
Fed Cattle Prices Sag Lower
Negotiated cash fed cattle prices were lower across a broad range last week. The weighted average five-area direct live steer price was $2.97 lower week to week on Thursday at $112.68/cwt. The dressed price was $4.13 lower at $179.17. Prices were $113.51 and $184.16 at the same time last year.
Live Cattle futures closed an average of $2.52 lower across the front five contracts week to week on Friday (37¢ lower to $5.82 lower in spot Jun) and then an average of 86¢ higher (20¢ higher to $1.22 higher).
Wholesale beef values continue to plunge, adjusting back to more normal fundamentals. Choice boxed beef cutout value was $101.86 lower week to week on Friday at $261.48/cwt. Select was $93.65 lower at $246.42.
Normalizing fundamentals have much to do with increased packing capacity that was significantly reduced by the pandemic.
“Cattle slaughter and beef production decreased on a year-over-year basis for four consecutive weeks. The lowest point occurred the last week of April when total cattle slaughter was down 34.8% year over year. Beef production that same week was down 33.8% compared to the same week one year ago,” Peel says.
Since then, cattle harvest increased faster than many expected.
Total fed cattle slaughter for the week ending May 23 was 444,378 head, which was 51,816 head more (+13.2%) than the previous week and the most since the first week of April, according to USDA’s Actual Slaughter Under Federal Inspection report. Total cattle slaughter of 571,506 head was 52,383 head more (+10.1%) than the prior week and the most since the first week of April. Compared to the prior year, though, fed cattle slaughter was still 14.5% less and total cattle slaughter was 11.6% less.
Estimated cattle slaughter under federal inspection last week of 636,000 head was 112,000 head more (+21.3%) than the previous week.
“These slaughter numbers will determine when the cattle and beef markets return to more normal relationships,” Koontz says. “There are very large supplies and substantial inventory of long-fed cattle on feed. There has been a steady improvement in fed cattle and feeder cattle prices through last month and into the current. Continued improvement hinges on any further disruptions and steady elevation in slaughter numbers.”
The average dressed steer weight for the week of May 23 was 894 lbs., which was 6 lbs. lighter than the previous week, but 52 lbs. more than the same week a year earlier. The average dressed heifer weight of 826 lbs. was 5 lbs. less than the previous week, but 41 lbs. heavier than the prior year.
Exports Offer Continued Support
Despite the many and varied disruptions wrought by COVID-19, U.S. beef exports are higher year over year.
April beef exports were down 6% from a year ago to 98,613 metric tons (mt), with value falling 11% to $600.9 million, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). But, exports achieved outstanding growth in Japan, where U.S. beef is benefiting from reduced tariffs under the U.S.-Japan Trade Agreement. Exports also trended higher to China, following the late-March implementation of the U.S.-China Phase One Economic and Trade Agreement.
For January through April, beef exports totaled 433,316 mt, up 5% from a year ago, valued at $2.66 billion (up 3%).
“Considering all the challenges the U.S. red meat industry faced in April, export results were encouraging,” says Dan Halstrom, USMEF president and CEO. “Exporters lost several days of slaughter and processing due to COVID-19, and shipments to Mexico and some other Latin American markets declined due to slumping currencies and the imposition of stay-at-home orders. Despite these significant headwinds, global demand for U.S. beef and pork remained strong.”
Friday to Friday Change
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||June 4||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$152.03||+ $0.09|
|700-800 lbs.||$141.46||– $0.60|
|800-900 lbs.||$130.42||– $1.84|
|500-600 lbs.||$154.23||– $1.57|
|600-700 lbs.||$143.15||+ $2.91|
|700-800 lbs.||$132.72||+ $1.38|
|400-500 lbs.||$150.63||+ $0.64|
|500-600 lbs.||$142.18||+ $0.49|
|600-700 lbs.||$132.66||+ $0.41|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||June 5 ($/cwt)||Change|
|Ch-Se Spread||$15.06||– $8.21|
|Feeder Cattle||June 5||Change|
|Jan ’21||$135.250||+ $1.025|
|Live Cattle||June 5||Change|
|Feb ’21||$108.050||– $0.375|
|Oil CME-WTI||June 5||Change|
|Equity Indexes||June 5||Change|
|Dow Industrial Average||27110.98||+ 1727.87|
|S&P 500||3193.93||+ 149.62|
|Dollar (DXY)||96.95||– 0.88|