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 |