Bearishness continued in cattle markets as futures prices dropped and cash prices eroded.
Nationwide, steers and heifer sold from steady to $7/cwt. lower, according to the Agricultural Marketing Service (AMS). There were instances of $10-$12 lower for lightweight steers.
“Grass cattle demand has subsided as ranchers are taking stock of what is going on in Chicago,” say AMS analysts. “CME cattle futures continued to close in the red this week and all market participants are standing up and taking notice…The loss of $100 per head or more on a 750 lb. steers in the matter of two weeks makes one wonder just what the heck is going on fundamentally.”
Likewise, the AMS reporter on hand for Thursday’s Superior Livestock Video auction noted, “There is limited demand for feeders. Demand for lightweight cattle headed to grass is moderate as grass accounts are pretty much full…Some producers chose to pass at current bids.”
Feeder Cattle futures closed an average of $6.73 lower week to week on Friday. That’s an average of $13.88 lower in the last two weeks.
However, weekly weighted average prices for calves and feeders remained higher year over year in the North Central region, according to USDA’s National Weekly Feeder and Stocker Cattle Summary. Compared to the same week a year earlier, prices were about even in other regions.
Fed Cattle Prices Continue Slide
Negotiated cash fed cattle prices were sharply lower for the week. Live trade was $3-$4 lower at $122-$123/cwt. in the Southern Plains; mostly $124 in Nebraska and $123-$127 in the western Corn Belt. Dressed trade was mainly $4-$6 lower at mostly $200. It’s worth noting that fed cattle prices remain higher year over year.
AMS analysts noted that estimated fed cattle trade (5-area) for the week of approximately 125,000 head would be the most since late October in 2018.
“The next 60 days are when some of the best meat consumption occurs in the U.S. and we will see how much is needed to satisfy our markets, both domestic and abroad,” say AMS analysts.
Live Cattle futures closed an average of $3.48 lower week to week on Friday. That’s an average of $9.27 lower in the last two weeks.
“The June Live Cattle contract price has declined $8 in the past two weeks, with the August and October contracts trading $4 lower than the June contract,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “If this price decline is realized, the market will have declined 14.6% from its spring high to its summer low, which is only slightly higher than the seasonal 13-14% that is normally experienced. Some may question the expectation of the price decline due to cattle on feed numbers or other factors, but the market has a way of balancing based on supply and demand.”
Choice boxed beef cutout value was $5.63 lower week to week on Friday afternoon at $227.36/cwt. Select was $6.12 lower at $213.29.
Griffith points out the Choice cutout value traded higher year over year every week so far this year, except for one.
“One should be able to say with certainty that the strength in the cutout price has supported the finished cattle market despite the 1.9% increase in total cattle slaughter, which means the average weekly slaughter is nearly 12,000 head higher than the same period in 2018,” Griffith explains. “The increase in slaughter numbers through the first 17 weeks of the year are from heifers and cows. Even with 198,000 additional head in the slaughter mix thus far, domestic beef production over that time is only 0.7% higher than a year ago or 56.4 million lbs. more. The ability of packers to push the Choice cutout price higher than year-ago levels with additional beef on the market would point to strong beef demand.”
Friday to Friday Change*
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||May 2||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||May 3 ($/cwt)||Change|
|Ch-Se Spread||$14.07||+ $0.49|
|Feeder Cattle||May 3||Change|
|Jan ’20||$145.400||– $6.775|
|Live Cattle||May 3||Change|
|Feb ’20||$116.650||– $3.725|
|Corn futures||May 3||Change|
|Mar ’20||$3.996||+ $0.042|
|Oil CME-WTI||May 3||Change|
|Equity Indexes||May 3||Change|
|Dow Industrial Average||26504.95||– 38.38|
|S&P 500||2945.64||+ 5.76|
|Dollar (DXY)||97.45||– 0.60|