Cattle markets continued to erode last week, pressured by everything from volatile outside markets whipsawed by kneejerk trade emotion, to the cool weather delaying summer grilling demand, to increasing fed cattle supplies.
Nationwide, steers and heifers sold steady to $5/cwt. lower, with instances of $10 lower, according to the Agricultural Marketing Service (AMS).
“Rain and waterlogged fields were the main talk across the breadbasket of the country as cattle receipts were hampered from Kansas to the Dakotas to Illinois and Indiana,” AMS analysts say.
A late-week rally helped Feeder Cattle futures close and average of 89¢ higher week to week on Friday (45¢ to $1.27 higher). The previous two weeks, Feeder Cattle slid about an average of $14 lower.
Oversold conditions and the significant decline in open interest offer hope the rally in Cattle futures represents a turn from the bottom.
“Feeder cattle prices in the cash market moving through summer and fall are now on course to remain steady with the previous six months, given the expectations of Feeder Cattle futures,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Though the past three weeks of futures trading have not been advantageous for folks marketing feeder cattle, there is still time for the market to recover some of its losses. One can never predict prices with 100% certainty, but there may be an opportunity that summer and fall Feeder Cattle futures prices move back to the low $150s which will present a marketing opportunity.”
Moreover, it appears grain prices will remain supportive.
Bearishness Prevails in Grain Markets
Despite wet conditions and late planting that threaten to decrease corn planting,Corn futures were an average of 16¢lower week to week on Friday, through the front six contracts (18¢to 21¢lower). Friday’s monthly World Agricultural Supply and Demand Estimates (WASDE) offered no support.
For instance, analysts with USDA’s Economic Research Service (ERS) projected the 2019-20 season-average farm price for corn 20¢ lowerat $3.30/bu., the lowest since 2006-07.
Likewise, in the latest WASDE, ERS analysts say, “The projected season-average farm price for wheat is $4.70/bu., down from last year’s estimated $5.20 on the expectation of greater export competition and lower U.S. corn prices.”
As for soybeans, WASDE projects the 2019-20 U.S. season-average price at $8.10/bu., down 45¢ from the previous year.
Soybean futures were down about 31¢on average week to week, through the front six contracts.
Fed Cattle Prices Continue Decline
Negotiated cash fed cattle trade continued to lose ground last week. Live sales were $2.00-$4.50 lower at $120/cwt. in the Southern Plains, mostly $121 in Nebraska and $122.00-$122.50 in the western Corn Belt. Dressed trade was $6-$11 lower in Nebraska at $189-$194. It was $8-$10 lower in the western Corn Belt at $190-$192.
“A $6 (per cwt.) loss in two weeks adds up to about $84 per head on an animal finishing at 1,400 lbs.,” Griffith explains. “There is good reason cattle feeders have been willing sellers at lower prices. That reason is the June Live Cattle futures price, which is trading at a $7-$8 discount to this week’s cash price. Cattle feeders are likely wanting to push even more cattle out of pens to keep from being forced to market those cattle on an even lower market than this week.”
Live Cattle futures closed mixed week to week on Friday, from an average of 54¢ lower (10¢ to 97 lower) to an average of 19¢ higher. They were down by about $9 on average the previous two weeks.
As mentioned earlier, cool, wet weather continues to stymie the seasonal increase in grilling demand.
Choice boxed beef cutout value was $6.25 lower week to week on Friday afternoon at $221.11/cwt. Select was $5.83 lower at $207.46.
Although upcoming holidays should offer an expected seasonal boost, cattle numbers and carcass weights are increasing. After months of lower year-over-year dressed steer and heifer weights, they began to draw even and then increase a couple of weeks ago. The average dressed steer weight of 854 lbs. (week ending Apr. 27) was 4 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. Average dressed heifer weights were 6 lbs. heavier at 794 lbs. Fed cattle slaughter for the same week was 14,665 head more at 512,477.
USDA didreduce beef production slightly for this year, in the latest WASDE. The May projection is 27.27 billion lbs., which would be 397 million lbs. more than last year.
“Beef production is forecast higher primarily on higher projected steer and heifer slaughter and heavier carcass weights,” according to ERS analysts.
Although slightly lower month to month, WASDE projects higher fed cattle prices year over year. The annual average fed steer price was projected at $118.50/cwt., compared to $117.12 last year. Prices are forecast at $121 in the second quarter, $113 in the third quarter and $114 in the fourth quarter.
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts May 10 |
Auction (head) (change) |
Direct (head) (change) |
Video-Net (head) (change) |
Total (head) (change) |
|
134,200 (-73,700) |
21,300 (-30,300) |
22,700 (-15,300) |
178,200 (-119,300) |
CME Feeder Index
| CME Feeder Index* | May 9 | Change |
| $135.52 | – 5.66 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | May 10 | Change |
| 600-700 lbs. | n/a | n/a |
| 700-800 lbs. | n/a | n/a |
| 800-900 lbs. | n/a | n/a |
South Central
| Steers-Cash | May 10 | Change |
| 500-600 lbs. | n/a | n/a |
| 600-700 lbs. | n/a | n/a |
| 700-800 lbs. | n/a | n/a |
Southeast
| Steers-Cash | May 10 | Change |
| 400-500 lbs. | n/a | n/a |
| 500-600 lbs. | n/a | n/a |
| 600-700 lbs. | n/a | n/a |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | May 10 ($/cwt) | Change |
| Choice | $221.11 | – $6.25 |
| Select | $207.46 | – $5.83 |
| Ch-Se Spread | $13.65 | – $0.42 |
Futures
| Feeder Cattle | May 10 | Change |
| May | $137.625 | + $0.475 |
| Aug | $146.825 | + $0.450 |
| Sep | $147.775 | + $0.625 |
| Oct | $148.750 | + $0.975 |
| Nov | $149.350 | + $1.100 |
| Jan ’20 | $146.675 | + $1.275 |
| Mar | $144.800 | + $1.025 |
| Apr | $145.650 | + $1.225 |
| Live Cattle | May 10 | Change |
| Jun | $112.450 | – $0.975 |
| Aug | $108.900 | – $0.250 |
| Oct | $109.025 | – $0.650 |
| Dec | $113.075 | – $0.500 |
| Feb ’20 | $116.750 | + $0.100 |
| Apr | $118.175 | + $0.175 |
| Jun | $112.000 | + $0.250 |
| Aug | $110.750 | + $0.250 |
| Oct | $112.000 | – $0.350 |
| Corn futures | May 10 | Change |
| May | $3.424 | – $0.206 |
| Jul | $3.516 | – $0.190 |
| Sep | $3.610 | – $0.166 |
| Dec | $3.720 | – $0.156 |
| Mar ’20 | $3.862 | – $0.134 |
| May | $3.960 | – $0.104 |
| Oil CME-WTI | May 10 | Change |
| Jun | $61.66 | – $0.28 |
| Jul | $61.80 | – $0.24 |
| Aug | $61.86 | – $0.21 |
| Sep | $61.83 | – $0.18 |
| Oct | $61.70 | – $0.16 |
| Nov | $61.49 | – $0.15 |
Equities
| Equity Indexes | May 10 | Change |
| Dow Industrial Average | 25942.37 | – 562.58 |
| NASDAQ | 7916.94 | – 247.06 |
| S&P 500 | 2881.40 | – 64.24 |
| Dollar (DXY) | 97.32 | – 0.13 |