Oversold conditions and atypically high wholesale beef prices, tied to the shift in more consumers eating at home, helped lift Cattle futures and negotiated cash fed cattle prices last week. In turn, cash calf and feeder cattle prices found some traction.
Steers and heifers sold $8-$15/cwt. higher, according to the Agricultural marketing Service (AMS). Auction receipts continued sparser than normal, stalled by understandable producer caution.
“Much of this stronger undertone is likely associated with the strong week that feeder cattle futures experienced and the strong week for live cattle sales,” explains Andrew P. Griffith, agricultural economist the University of Tennessee, in his weekly market comments.
Feeder Cattle futures closed an average of $2.12 higher week to week on Friday, not counting recently minted away Mar (65¢ higher at the back to $3.30 higher).
Except for 10¢ and 30¢ lower in two contracts, Live Cattle futures closed an average of 54¢ higher week to week on Friday, from 12¢ higher to $2.30 higher in spot Apr.
Extreme volatility continued, though, with limit-up and expanded limit-up moves early in the week and then limit-down and near-limit down moves toward the end of the week.
“Despite the stronger prices, the volatility in the futures market will keep many cattle producers on the sidelines as it should,” Griffith says. “…Market volatility is not a big issue for producers who do not have anything that needs to be marketed immediately, because they are only experiencing a loss in value of a commodity. Alternatively, those who must market cattle in the near term may actually experience that loss in value. As an example, a person with a load of feeder cattle two weeks ago may have been offered $10-$15/cwt. less for those animals than they may have been offered this week. That equates to a $5,000 to $7,500 difference in value over a two-week period on a 50,000 lb. load. The situation cattle producers are traversing right now is the exact reason price risk management should be included in a producer’s business plan.”
Fed Cattle Prices Climb
Wholesale beef values continued extraordinarily high last week, relative to supplies and seasonal expectations.
Choice boxed beef cutout value was 91¢ lower week to week on Friday at $252.84/cwt. Select was $2.21 higher at $242.38.
Wholesale price strength helped boost fed cattle prices. Week to week through Thursday, the five-area direct fed steer price was $9.64/cwt. higher on a live basis at $119.44. It was $16.20 higher in the beef at $189.31.
Regionally, negotiated cash fed cattle prices were mostly $8-$10 higher on a live basis at $118-$120/cwt. in the Southern Plains and $119-120 up north. Dressed sales were $15-$20 higher at $190.
“Slaughter cow prices skyrocketed early in the week at auctions nationwide,” say AMS analysts. “Demand for boneless lean ground beef continued to move higher as cow plants needed product to move through the marketing chain to fill ground beef orders place by retailers. With most restaurants nationwide either closed or only filling carry out orders, grocery stores have had trouble finding enough protein products to fully stock their cases.”
Earlier in the week, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, explained in his weekly market comments, “Disruptions in normal activities due to COVID-19 have produced a surge in at-home food demand. Recent reports indicate a 77% year-over-year increase in grocery meat sales in mid-March. The spike in grocery demand overwhelmed the retail meat supply chain, resulting in temporary shortages of meat in many grocery stores. The shortages are due to the tremendous logistical challenges of shifting meat supplies from food service channels to retail grocery channels.”
Peel emphasized for consumers that there is no shortage of beef or other meats. Beef, pork and poultry production was record large in the first quarter and is projected to be record large this year at 109.3 billion lbs., 4.3% more than last year.
“Beef production is projected to be 1.9% higher year over year in 2020, totaling 27.7 billion lbs.,” according to Peel. “Increased beef production is concentrated in the first half of the year. Total steer and heifer slaughter is up 3.9% year over year for the year to date. Steer carcass weights for the year to date are up over 21 lbs. year over year with heifer carcass weights up over 12 lbs. First-quarter beef production is estimated to increase 6.6% over last year.”
Uncertain domestic demand in tandem with increasing beef supplies helped pressure Live Cattle futures at the end of the week.
As Brenda Boetel, livestock economist at the University of Wisconsin-River Falls explained in the latest issue of In the Cattle Markets, “There is no evidence that consumers are eating more beef currently, and as such the demand will likely decrease significantly once the supply system catches up with the rush demand of the last few weeks.”
Friday to Friday Change
Weekly Auction Receipts
| Mar. 27 | Auction | Direct |
Video/net |
Total |
|
87,200 (+28,200) |
22,000 (+11,800) |
4,200 (-12,300) |
113,400 (+27,700) |
CME Feeder Index
| CME Feeder Index* | Mar. 26 | Change |
| $130.44 | + $9.06 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Mar. 27 | Change |
| 600-700 lbs. | $155.66 | + $9.05 |
| 700-800 lbs. | $143.18 | + $10.05 |
| 800-900 lbs. | $133.05 | + $7.41 |
South Central
| Steers-Cash | Mar. 27 | Change |
| 500-600 lbs. | $161.30 | + $15.04 |
| 600-700 lbs. | $145.80 | + $11.26 |
| 700-800 lbs. | $137.04 | + $16.31 |
Southeast
| Steers-Cash | Mar. 27 | Change |
| 400-500 lbs. | $158.22 | + $14.08 |
| 500-600 lbs. | $144.15 | + $10.65 |
| 600-700 lbs. | $132.37 | + $10.14 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Mar. 27 ($/cwt) | Change |
| Choice | $252.84 | – $0.91 |
| Select | $242.38 | + $2.21 |
| Ch-Se Spread | $10.46 | – $3.12 |
Futures
| Feeder Cattle | Mar. 27 | Change |
| Apr | $120.600 | + $1.775 |
| May | $120.925 | + $2.675 |
| Aug | $127.100 | + $3.300 |
| Sep | $127.575 | + $2.700 |
| Oct | $128.525 | + $2.450 |
| Nov | $128.800 | + $1.300 |
| Jan ’21 | $128.250 | + $0.650 |
| Mar | $127.700 | n/a |
| Live Cattle | Mar. 27 | Change |
| Apr | $100.950 | + $2.300 |
| Jun | $89.425 | – $0.100 |
| Aug | $90.450 | – $0.300 |
| Oct | $94.325 | + $0.325 |
| Dec | $98.325 | + $0.125 |
| Feb ’21 | $102.625 | + $0.225 |
| Apr | $104.500 | + $0.125 |
| Jun | $98.425 | + $0.300 |
| Aug | $97.000 | + $0.350 |
| Corn | Mar. 27 | Change |
| May | $3.460 | – $0.024 |
| Jul | $3.516 | – $0.022 |
| Sep | $3.560 | – $0.014 |
| Dec | $3.642 | – $0.010 |
| Mar ’21 | $3.740 | – $0.008 |
| May | $3.784 | – $0.010 |
| Oil CME-WTI | Mar. 27 | Change |
| May | $21.51 | – $1.12 |
| Jun | $25.15 | + $0.79 |
| Jly | $28.13 | + $2.20 |
| Aug | $30.05 | + $2.95 |
| Sep | $31.30 | + $3.28 |
| Oct | $32.14 | + $3.34 |
Equities
| Equity Indexes | Mar. 27 | Change |
| Dow Industrial Average | 21636.78 | +2463.30 |
| NASDAQ | 7502.38 | + 622.86 |
| S&P 500 | 2541.47 | + 236.55 |
| Dollar (DXY) | 98.31 | – 4.51 |