Cattle and beef markets continued to erode on seasonal pressure, weather delays and bearishness concerning looming heavy beef production.
Nationwide, steers and heifers sold steady to $5/cwt. lower, with instances of as much as $8 lower, according to the Agricultural Marketing Service (AMS).
Feeder Cattle futures closed an average of $1.46 lower week to week on Friday (95¢ to $3.10 lower in spot May). That was with a surge of about $3.40 higher during the last two sessions, except for spot May.
“It is not surprising to see the lightweight calf market begin to soften as the market begins to move towards late spring and early summer. However, it is disconcerting to watch yearling cattle prices soften during this same time period when they typically begin seeing support,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.
However, Griffith points out current Feeder Cattle futures prices are only $8-$12 below the trading range from late October to the middle of March.
“During this entire time period, cash feeder cattle prices never surged higher nor did they have a washout. People actually making a living with cattle have continued trading on a flat market with little change in price the past seven months,” Griffith says.
Based on recent prices and pressure on feedlot economics, analysts with USDA’s Economic Research Service (ERS) lowered the expected feeder steer price (Oklahoma City) by $2 for the second quarter to $145/cwt. In the monthly Livestock, Dairy and Poultry Outlook, ERS projects the annual feeder steer price for this year at $145.50.
In his weekly market comments,Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says he expects prices to increase seasonally for heavy feeder cattle as feedlot pen conditions improve.
One potential snag in that outlook could be higher feed prices if planting continues to be delayed by wet, cool weather. As of May 12, only 30% of corn was planted, according to the USDA Crop Progress report. That was 29% less than last year and 36% less than the 5-year average.
Corn futures closed an average of 23¢higher through the front six contracts week to week on Friday (13¢higher to 31¢higher in spot Jul).
Fed cattle Prices Lose More Ground
Negotiated cash fed cattle trade was $3-$5 lower last week on a live basis at $115-$117/cwt. in the Southern Plains, $117 in Nebraska and $116-$118 in the western Corn Belt. Dressed prices were $2-$5 lower in the western Corn Belt at $185-$190 and $3-$10 lower in Nebraska at $185-$186.
“The positive basis has been the motivating factor for most feedlot managers to push cattle out of the feedlot, even though they would prefer to hold the line on cash-traded cattle,” Griffith explains. “The current week’s cash trade is still resulting in a $6 positive basis, but the expectation is for this to be whittled away over the next month. It would appear the finished cattle market is now in a situation where things are going to get worse before they start to get better.”
Live Cattle futures closed mixed week to week on Friday, from 10¢ to $1.17 lower in three contracts, to an average of 61¢ higher (2¢ to $1.32 higher).
The slow start to grilling season continues to weigh on beef prices.
Choice boxed beef cutout value was 80¢ lower week to week on Friday afternoon at $220.31/cwt. Select was 82¢ higher at $208.28.
“It is almost certain that Choice beef has hit its 2019 high and there is a real possibility that Choice boxes will test the $200 mark,” Griffith says. “It may take some additional bad news to push prices below $200, but it could occur. Similarly, the Choice Select spread has been seasonal, but the spread is nearly $10 lower than the widest spread a year ago which hints toward supply and demand of Choice versus Select beef.”
Friday to Friday Change*
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||May 16||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||May 17 ($/cwt)||Change|
|Ch-Se Spread||$12.03||– $1.62|
|Feeder Cattle||May 17||Change|
|Jan ’20||$145.575||– $1.100|
|Live Cattle||May 17||Change|
|Feb ’20||$117.950||+ $1.200|
|Corn futures||May 17||Change|
|Mar ’20||$4.076||+ $0.214|
|Oil CME-WTI||May 10||Change|
|Equity Indexes||May 17||Change|
|Dow Industrial Average||25764.00||– 178.37|
|S&P 500||2859.53||– 21.87|
|Dollar (DXY)||98.01||+ 0.69|