Calves and feeder cattle sold mixed at the weekly auctions monitored by Cattle Current last week, but mainly steady to higher in the Southeast.
Sluggish, stagnant negotiated cash fed cattle prices, tied to the abundant supply, and seasonally weaker wholesale beef prices continue to hamper markets. On the other hand, improving supply fundamentals after the first quarter and the potential for a demand bounce from COVID-19 economic stimulus are boosting confidence.
Passage of the federal government’s $1.9 trillion coronavirus relief funding added support to overall equity and commodity markets last week, along with growing optimism the nation’s vaccination program is paving the way toward economic recovery.
Week to week on Friday, Feeder Cattle futures closed an average of $2.42 higher ($1.25 higher at the back to $4.20 higher toward the front).
The CME Feeder Cattle Index was 72¢lower week to week on Thursday at $134.13.
“The number of stocker cattle buyers is increasing as warm weather has resulted in cool season perennial pastures starting to green and grow,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “This trend will continue the next several weeks as spring and summer grazing operations look to fill pastures with lightweight cattle that will be efficient on grass and that will be ready for the feedlot in late summer or early fall. The primary interest in cattle is the lightweight animals. Heavier feeder cattle that would be destined for the feedlot are not garnering as much interest.”
In the meantime, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University points out auction volumes will increase in the Southern Plains over the next few weeks as cattle grazing dual-purpose winter wheat pasture head to market.
“Another factor hanging over feeder markets is the dramatic rise in feed costs and feedlot cost of gain,” Peel says, in his weekly market comments. “The latest summary of the Kansas Focus on Feedlots data shows that feedlot cost of gain for closeouts in January was up 8.6% from the recent low in October. Feedlot cost of gain will continue to increase and reflect higher grain prices in the coming months. Feeder prices will continue to adjust in response higher feed prices as the year progresses.”
There was a brief, slight respite last week with Corn futures closing an average of 5.5¢ lower on Friday, through the front six contracts (2.6¢ to 12.8¢ lower).
“U.S. corn market prices continue to rise, largely driven by strong export demand and tight global supplies,” say analysts with USDA’s Economic Research Service (ERS), in the latest USDA Feed Outlook. “The average cash-spot corn-market prices for Central Illinois and the Gulf for February 2021 were $5.56/bu. and $6.24/bu., respectively. By comparison, the same prices in February 2020 were $3.75 and $4.29.”
ERS left the 2020-21 U.S. corn supply and use outlook unchanged in the latest monthly World Agricultural Supply and Demand Estimates (WASDE) released last week. The projected season-average farm price also was unchanged at $4.30/bu.
Fed Cattle Prices Continue Steady
During the next several months, cattle feeders should begin wresting some long-held market leverage back from beef packers. Until then, packers are holding prices in check.
Negotiated cash fed cattle prices were steady last week at $114/cwt. in the Southern Plains, steady to $1 higher at $114 in Colorado, steady in Nebraska at $113-$114 and steady to $1 lower in the western Corn Belt at $112-$113. Dressed trade was steady in Nebraska at $180 and steady to $2 lower in the western Corn Belt at $178-$180.
Week to week on Friday, Live Cattle futures an average of $1.68 higher (87¢ to $2.70 higher) except for 2¢ lower in spot Apr.
“For six consecutive weeks, finished cattle have traded steady, with the 5-area weighted average price being in less than a $0.50/cwt. range,” Griffith says. “This screams packer leverage and complete control of the market in the short term. How long packers will maintain this leverage is not known. The supply information would indicate leverage shifting to cattle feeders fairly soon. However, it seems we do not always have complete information in this analysis. The April Live Cattle contract has declined $6 over a four-week period and the cash price is showing no signs of making a run to $120, much less to $126 where it peaked. A rally through the end of March will go a long way to positivity throughout the cattle complex.”
Fed steer price forecasts were unchanged in the latest WASDE at $113/cwt. for the first and second quarters, $114 in the third quarter and $119 in the fourth quarter for an annual average of $115.
Wholesale Beef Prices Soften
Choice boxed beef cutout value was $5.46 lower week to week on Friday at $225.87/cwt. Select was 58¢ lower at $220.27.
Griffith points out declining Choice prices the past couple of weeks, as well as the narrowing Choice-Select price spread are typically associated with January and February, rather than March.
“January and February tend to be the weakest demand months for beef, which depresses beef prices. Similarly, the shift in beef consumption during the winter months tends to be from middle meats to end meats, which results in the narrowing of the Choice-Select spread,” Griffith explains. “As the market moves through March, Choice beef prices tend to escalate more quickly than Select prices, because the market is gearing up for post-Easter demand and the grilling season.”
ERS analysts increased estimated beef production for this year by 40 million lbs. in the latest WASDE to 27.58 billion lbs.
“First-half beef production is raised from last month as lower expected fed cattle slaughter in the first quarter is more than offset by higher first-half non-fed cattle slaughter,” according to ERS analysts. “Second-half production is adjusted to reflect a more rapid pace of first-quarter feedlot placements.”
Total red meat and poultry production was reduced 127 million lbs. to 107.47 billion lbs., with expected reductions in pork, broiler and turkey production.
Friday to Friday Change
Weekly Auction Receipts
| Mar. 15 | Auction | Direct |
Video/net |
Total |
|
303,200 (+20,400) |
58,900 (+2,200) |
31,900 (+19,000) |
394,000 (+41,600) |
CME Feeder Index
Thursday through Thursday…
| CME Feeder Index* | Mar. 11 | Change |
| $134.13 | – $0.72 |
*Wednesday-to Wednesday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Mar. 15 | Change |
| 600-700 lbs. | $154.41 | – $0.60 |
| 700-800 lbs. | $141.85 | – $1.19 |
| 800-900 lbs. | $130.95 | – $2.49 |
South Central
| Steers-Cash | Mar. 15 | Change |
| 500-600 lbs. | $163.00 | – $1.47 |
| 600-700 lbs. | $148.35 | + $2.30 |
| 700-800 lbs. | $136.59 | + $1.28 |
Southeast
| Steers-Cash | Mar. 15 | Change |
| 400-500 lbs. | $162.87 | – $1.75 |
| 500-600 lbs. | $148.62 | – $2.16 |
| 600-700 lbs. | $136.32 | – $0.82 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Mar. 12 ($/cwt) | Change |
| Choice | $225.87 | – $5.46 |
| Select | $220.27 | – $0.58 |
| Ch-Se Spread | $5.60 | – $4.88 |
Futures
| Feeder Cattle | Mar. 12 | Change |
| Mar | $136.350 | + $1.750 |
| Apr | $143.225 | + $4.200 |
| May | $148.375 | + $3.225 |
| Aug | $156.575 | + $2.850 |
| Sep | $157.150 | + $2.325 |
| Oct | $157.325 | + $1.950 |
| Nov | $157.500 | + $1.850 |
| Jan ’22 | $156.100 | + $1.250 |
| Live Cattle | Mar. 12 | Change |
| Apr | $119.000 | – $0.025 |
| Jun | $120.425 | + $2.425 |
| Aug | $119.775 | + $2.700 |
| Oct | $123.700 | + $2.250 |
| Dec | $125.900 | + $1.425 |
| Feb ’22 | $128.225 | + $1.325 |
| Apr | $129.000 | + $0.875 |
| Jun | $123.575 | + $1.075 |
| Aug | $122.500 | + $1.375 |
| Corn | Mar. 12 | Change |
| Mar ’21 | $5.492 | – $0.128 |
| May | $5.390 | – $0.064 |
| Jly | $5.284 | – $0.056 |
| Sep | $4.960 | – $0.030 |
| Oct | $4.786 | – $0.028 |
| Mar ’22 | $4.864 | – $0.026 |
| Oil CME-WTI | Mar. 12 | Change |
| Apr | $65.61 | – $0.48 |
| May | $65.64 | – $0.28 |
| Jun | $65.36 | – $0.09 |
| Jly | $64.84 | + $0.03 |
| Aug | $64.19 | + $0.12 |
| Sep | $63.48 | + $0.18 |
Equities
| Equity Indexes | Mar. 12 | Change |
| Dow Industrial Average | 32778.64 | + 1282.34 |
| NASDAQ | 13319.87 | + 399.72 |
| S&P 500 | 3943.34 | + 92.40 |
| Dollar (DXY) | 91.66 | – 0.32 |