Cattle Current Weekly Highlights—Week ending Mar. 6, 2020

Cattle Current Weekly Highlights—Week ending Mar. 6, 2020

Extreme volatility reigned in Cattle futures and equity markets again last week as folks grapple with the unknowable eventual economic impact of COVID-19.

“The main unknown that markets are concerned with is in relationship to demand for consumer goods,” explains Andrew P. Griffith, agricultural economist at the University of Missouri, in his weekly market comments. “Meat markets are trying to figure out how demand for meat in the food service industry will be influenced, and if any losses in that sector will be offset by gains at grocery stores and other similar retail food outlets. Additional unknowns about markets and the virus itself lead to even more uncertainty and the tendency to undervalue commodity goods.”

Nationwide, calves and feeders traded from $2 lower to $3 higher, according to the Agricultural Marketing Service (AMS).

That was despite another horrendous week for Cattle futures.

Except for 57¢lower in spot Mar, Feeder Cattle futures closed an average of $3.30 lower week to week. After the spot month, that makes for an average decline of $11.04 in the last two weeks.

Live Cattle futures closed an average of $1.81 lower week to week on Friday ($1.17 lower toward the front to $2.82 lower at the back). That’s an average of $8.15 lower in the last two weeks.

AMS analysts point out the April Live Cattle contract lost $18.55 since Jan. 24, while the June contract gave up $16—equivalent to more than $200 per head, basis a steer at 1,300 lbs.

Fed Cattle Prices Erode Further

Negotiated cash fed cattle trade ended up $2 lower on a live basis last week in Nebraska and the Southern Plains at $113/cwt. It was $1 higher to $2 lower in the western Corn Belt at $113-$115. Dressed trade was $5 lower in Nebraska at $180-$182; steady to $5 lower at the same money in the western Corn Belt.

Wholesale beef values appeared to turn the seasonal corner. Week to week on Friday, Choice boxed beef cutout value was $2.17 higher at $207.47/cwt. Select was $3.66 higher at $202.57.

“As the beef market wades through the uncertainty of coronavirus, it is clear that higher grading beef is taking a bigger hit than lower grading beef, while seasonal trends are also weighing heavily on beef that is grading Choice or higher,” Griffith explains. “From November 2019 through February, the monthly Prime beef cutout value declined from $256 to $224/cwt., while the branded beef cutout value slipped from $240 to $214.

“The Choice cutout responded similarly with the composite value declining from $233 to $210 over that four-month period. Alternatively, the Select cutout price in November was $212 and traded close to $207 in February, while ungraded beef was at $200 in November and $194 in February.”

One bright spot is that cattle slaughter continues at an aggressive pace.

Last week’s cattle slaughter, estimated at 647,000 head—20,000 head more than the previous week and 40,000 head more than last year—was the most for the week since 2008, according to AMS.

Looking Ahead

Near term, at least the next 30-60 days, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University believes producers should expect markets to remain weak, if not weaker.

“It seems unlikely that any definitive news is forthcoming, certainly not in the next few weeks, which would allow markets to bounce back with any confidence,” Peel explains in his weekly market comments. “I don’t think we are ready yet to change the overall outlook for the year, but the prospect is growing that we might have to trim back our expectations for 2020.

“Producers probably should not make dramatic changes to production and marketing plans just yet, but it would be a good idea to think about how you will adjust things if we have to shift from offense to defense for the entire year.”

 

Friday to Friday Change

Weekly Auction Receipts

 

Mar. 6 Auction Direct

Video/net

Total
 

179,900

(-22,800)

46,000

(-21,000)

28,300

(+27,100)

254,200

(-16,700)

 

CME Feeder Index

CME Feeder Index* Mar. 5 Change
  $133.87 –  $1.73

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Mar. 6 Change
600-700 lbs. $156.72 –  $0.15
700-800 lbs. $143.65 + $0.91
800-900 lbs. $132.62 –  $1.59

 

South Central

Steers-Cash Mar. 6 Change
500-600 lbs. $166.75 + $3.33
600-700 lbs. $148.97 + $1.58
700-800 lbs. $136.80 + $1.08

 

Southeast

Steers-Cash Mar. 6 Change
400-500 lbs. $163.81 + $1.52
500-600 lbs. $151.33 + $0.66
600-700 lbs. $139.59 + $1.52

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Mar. 6 ($/cwt) Change
Choice $207.47 + $2.17
Select $202.57 + $3.66
Ch-Se Spread $4.90 –  $1.49

 

Futures

Feeder Cattle  Mar. 6 Change
Mar $130.700 –  $0.575
Apr $130.050 –  $2.650
May $131.150 –  $2.375
Aug $138.500 –  $3.050
Sep $139.925 –  $3.600
Oct $140.700 –  $4.125
Nov $141.025 –  $4.625
Jan ’21 $139.675 –  $2.675

 

Live Cattle   Mar. 6 Change
Apr $105.750 –  $1.825
Jun $100.025 –  $1.175
Aug $101.175 –  $1.100
Oct $106.200 –  $1.325
Dec $110.475 –  $1.800
Feb ’21 $113.450 –  $2.175
Apr $115.000 –  $2.150
Jun $108.875 –  $1.925
Aug $106.975 –  $2.825

 

Corn  Mar. 6 Change
Mar  $3.772 +$0.108
May $3.760 +$0.078
Jul $3.792 +$0.068
Sep $3.774 +$0.050
Dec $3.814 +$0.044
Mar ’21 $3.916 +$0.042

 

Oil CME-WTI Mar. 6 Change
Apr $41.28 –  $3.48
May $41.51 –  $3.43
Jun $41.77 –  $3.33
Jly $42.04 –  $3.19
Aug $42.33 –  $3.02
Sep $42.64 –  $2.82

 

Equities

Equity Indexes Mar. 6 Change
Dow Industrial Average  25864.78 +  455.42
NASDAQ    8575.62 +       8.25
S&P 500    2972.37 +      18.15
Dollar (DXY)        96.09 –        2.04
2020-03-08T16:10:07-06:00

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