At least shades of normalcy returned to calf and feeder cattle markets last week, with auction receipts of 219,200 head being more year over year for the first time in 10 weeks, according to the Agricultural Marketing Service (AMS).
Renewed volume, relative to the continued packing bottleneck and slowed feedlot turnover, went a long ways in explaining some weaker auction prices week to week, despite gains in Cattle futures.
Nationwide, steers and heifers sold steady to $4 /cwt. lower, according to AMS. The exception was $2-$4 higher for heifers weighing 700-900 lbs. in the North Central and South Central regions.
Not counting recently minted away-Apr, Feeder Cattle futures closed an average of 68¢ higher week to week on Friday (10¢ to $1.25 higher), except for $1.62 lower in Mar.
Given ongoing market uncertainty, Andrew P. Griffith, agricultural economist at the University of Tennessee says he continues to receive questions from producers about whether to sell calves now or wait.
“There are very few, if any, acceptable outcomes, given the current environment,” Griffith says, in his weekly market comments. “Determining the true value of the cattle is nearly impossible in this environment, given the risk that the buyer is taking. That is not to say the current marketing environment is any riskier than it was in January, but buyers’ perceptions of risk have changed, which means they are not going to be as willing to bid up for cattle. Not knowing when anything will improve may mean that many producers just have to take their losses today and hope the next round is more profitable.”
It’s also worth noting that cattle are starting to move to market from wheat pasture.
Fed Prices Battle for Steady
Negotiated cash fed cattle prices ended the week across a wide range but generally steady with the previous week with live prices at $95-$100 in the Texas Panhandle, $95-$105 in Kansas and Nebraska and at $93-$100 in the western Corn Belt. Dressed sales were at $150-$160.
Through Thursday, the negotiated five-area daily weighted average direct live steer price was $1.03 less than the previous week at $95.92/cwt. It was 23¢more in the beef at $154.50.
Live Cattle futures closed an average of $2.79 higher week to week on Friday ($1.55 higher at the back to $4.62 higher in spot Jun), not counting newly minted away Oct.
“Cash cattle continue to trade with a strong basis compared to the June Live Cattle futures price, which is trading near $87-$88, which means hedged cattle can still make some money for the feedlot operator,” Griffith says. “The rather large basis points to a disconnect between the cash and futures market at this time, but that disconnect is largely the risk of the unknown. The one known fact is that cattle feeders still have cattle that need to be marketed and they can only slow growth so much.”
Support for the fed cattle market last week included the Executive Order signed by President Trump mandating that meat packing and processing facilities remain open. At the time, estimated daily hog and cattle slaughter were both down about 40% compared to the same time last year, according to Jayson Lusk, noted Purdue University food and agricultural economist, in his blog.
“Plant closures and slow-downs from COVID-19 have reached such levels that it will be impossible for consumers not to notice effects on meat prices or availability in the coming weeks,” Lusk says.
“While there are currently no widespread shortages of beef, we are seeing supply chain disruptions because of plant closures and reductions in the processing speed at many, if not most, beef processing plants in the United States. We thank President Trump for his recognition of the problem and the action he has taken to begin correcting it,” says Colin Woodall chief executive officer of the National Cattlemen’s Beef Association.
“The executive order will help ensure a steady, reliable supply of high-quality U.S. protein-not only for customers in the United States, but across the globe,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF). “The U.S. meat industry is already taking extraordinary steps to ensure worker safety, including COVID-19 testing, temperature checks, use of personal protective equipment and social distancing of employees. But further action is needed to stabilize our meat supply chain, and USMEF greatly appreciates the Trump administration’s prioritization of safe and consistent meat production and processing during this difficult time.”
Under the Executive Order and the authority of the Defense Production Act, USDA will work with meat processing to affirm they will operate in accordance with the CDC and OSHA guidance, and then work with state and local officials to ensure that these plants are allowed to operate, according to U.S. Agriculture Secretary Sonny Perdue.
Of course, there can be a Grand Canyon’s worth of difference between packing and processing plants remaining open and operating at capacity. Until something approaching normalcy returns to beef packing, risk premiums will likely continued to be applied to fed cattle prices and paid for available beef.
“Estimated slaughter under federal inspection for the week was reported at a miniscule 425,000 head, which was 40,000 head less than last week and 248,000 head less than last year,” say AMS analysts. “During this week, fed steer and heifer slaughter was estimated some days at 50,000 head, which would be almost half of what can be done when plants are running at full capacity.”
Choice boxed beef cutout value was $84.08 higher week to week (+28.7%) on Friday at $377.45/cwt. Select was $78.11 higher (+28.0%) at $357.13.
Friday to Friday Change
Weekly Auction Receipts
| May 1 | Auction | Direct |
Video/net |
Total |
|
219,200 (+61,100) |
75,500 (+15,100) |
1,300 (-3,100) |
296,900 (+73,100) |
CME Feeder Index
| CME Feeder Index* | Apr. 30 | Change |
| $119.39 | – $0.09 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | May 1 | Change |
| 600-700 lbs. | $146.92 | – $3.54 |
| 700-800 lbs. | $134.09 | – $0.23 |
| 800-900 lbs. | $122.53 | – $2.16 |
South Central
| Steers-Cash | May 1 | Change |
| 500-600 lbs. | $149.35 | – $3.77 |
| 600-700 lbs. | $136.02 | – $1.26 |
| 700-800 lbs. | $122.17 | – $0.24 |
Southeast
| Steers-Cash | May 1 | Change |
| 400-500 lbs. | $145.25 | – $3.81 |
| 500-600 lbs. | $137.41 | – $2.08 |
| 600-700 lbs. | $125.66 | – $3.13 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | May 1 ($/cwt) | Change |
| Choice | $377.45 | + $84.08 |
| Select | $357.13 | + $78.11 |
| Ch-Se Spread | $20.13 | + $5.78 |
Futures
| Feeder Cattle | May 1 | Change |
| May | $117.825 | + $0.375 |
| Aug | $127.650 | + $1.250 |
| Sep | $129.050 | + $1.250 |
| Oct | $129.900 | + $0.975 |
| Nov | $130.475 | + $0.150 |
| Jan ’21 | $129.075 | + $0.100 |
| Mar | $128.125 | – $1.625 |
| Apr | $129.475 | n/a |
| Live Cattle | May 1 | Change |
| Jun | $87.250 | + $4.625 |
| Aug | $92.550 | + $3.650 |
| Oct | $96.800 | + $2.325 |
| Dec | $100.975 | + $2.550 |
| Feb ’21 | $105.375 | + $2.525 |
| Apr | $107.525 | + $2.350 |
| Jun | $101.250 | + $2.050 |
| Aug | $101.050 | + $1.550 |
| Oct | $103.000 | n/a |
| Corn | May 1 | Change |
| May | $3.114 | – $0.042 |
| Jul | $3.184 | – $0.046 |
| Sep | $3.254 | – $0.020 |
| Dec | $3.366 | -0- |
| Mar ’21 | $3.502 | +$0.010 |
| May | $3.582 | +$0.026 |
| Oil CME-WTI | May 1 | Change |
| Jun | $19.78 | + $2.84 |
| Jly | $22.29 | + $1.07 |
| Aug | $24.20 | + $0.34 |
| Sep | $25.69 | – $0.02 |
| Oct | $26.79 | + $0.02 |
| Nov | $27.74 | + $0.07 |
Equities
| Equity Indexes | May 1 | Change |
| Dow Industrial Average | 23723.69 | – 51.58 |
| NASDAQ | 8604.95 | – 29.57 |
| S&P 500 | 2830.71 | – 6.03 |
| Dollar (DXY) | 98.79 | – 1.50 |