Cattle markets appeared to turn a near-term corner as futures markets rallied back to recover most of the previous week’s decline.
Feeder Cattle futures closed an average of 5.56 higher week to week on Friday (3.81 higher in expiring May to $7.30 higher in Aug).
Incidentally,CME will delay listing the May 2019 Feeder Cattle futures and options contracts until June 10, 2018 for a trade date of June 11, 2018.
Live Cattle futures closed an average of $3.32 higher week to week on Friday (2.25 to $4.12 higher).
That was despite the seasonal ebb in fed cattle prices, amped up by increased supplies.
Estimated total cattle slaughter was 647,000 head for the week; it was 660,000 head the previous week, according to the Agricultural Marketing Service (AMS). Based on the April livestock slaughter report issued during the week, beef production of 2.12 billion lbs. was 8% more than the previous year. Cattle slaughter of 2.64 million head was 7% more.
Through late Friday afternoon, negotiated cash fed cattle trade remained undeveloped.
“Finished cattle trade was thin at best,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “This could be because of significant delayed-delivery trade in previous weeks. Additionally, it could be due to the holiday shortened slaughter week next week.”
Calf and Feeder Prices Trend Steady to Higher
Firmer futures markets helped lift cash calf and feeder cattle prices.
Steers and heifers sold steady to $5/cwt. higher, with good demand nationwide, according to the AMS.
“Supply was described as moderate to heavy at some livestock auctions in the midsection of the country,” AMS analysts say. “However, most in Nebraska and the Dakotas either took the week off or will be moving to a summer schedule in the near future due to lighter receipts.”
Logic suggests the market will view Friday’s Cattle on Feed report as neutral to perhaps a touch bearish, with numbers mostly in line with expectations ahead of the report.
Placements in April of 1.695 million head were 8.28% less than the previous year (153,000 head fewer). That’s about 1% more than estimates ahead of the report.
Marketings in April of 1.803 million head were 5.87% more than last year (100,000 head more).
Total cattle on feed May 1—feedlots with 1,000 head or more capacity—of 11.558 million head were 5.09% more than the previous year (560,000 head more). That’s the second most cattle on feed May 1 since the series began in 1996, according to the National Agricultural Statistics Service.
“The number of cattle on feed remains elevated compared to last year, but the number of cattle placed in feedlots during April has slowed tremendously,” Griffith says. “Much of the reduction in placements is due to cattle being placed earlier than normal, which means cattle will likely be coming off feed earlier than normal and likely at lighter weights than would be expected.”
Wholesale Beef Values Soften
“Based on beef cutout prices, it would appear the wholesale beef market is beginning to experience some fatigue,” Griffith says.
Choice boxed beef cutout value was $3.78 lower week to week on Friday at $227.43/cwt. Select was $3.84 lower at $204.62.
“Year-to-date federally inspected beef production is 3.5% higher than one year ago. There have been five weeks this year with greater than a 6.0% increase in production compared to the same week one year ago,” Griffith explains. “The last three weeks of data make up three of those five weeks. It is expected that many of the weeks in the next couple of months will far surpass production from the previous year, as many of the cattle that entered the feedlot earlier than normal will be marketed to packers. Another influence for softer prices is that Memorial Day buying is complete. There may be some post-holiday purchasing, but it will likely be limited in nature.”
Pastures Struggle
“The arrival of grass in the Plains states was late due to lower than normal temperatures through April; many areas are still experiencing drought conditions,” AMS analysts say. “Anticipation of hay tonnage being lighter than normal in many areas leaves producers with a conundrum: sell fall calves or sell cows, as grazing conditions are not conducive to do both this year.”
Overall pasture and range improved ever so slightly last week, according to the most recent USDA Crop Progress report (week ending May 20).
43% of pasture and range was in Good or Excellent condition, compared to 62% last year. 19% was rated as Poor or Very Poor compared to 10% last year.
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts May 25 |
Auction (head) (Change) |
Direct (head) (Change) |
Video/net (head) (Change) |
Total (head) (Change) |
|
184,200 (-6,200) |
47,500 (+11,500) |
10,600 (-13,900) |
242,300 (-8,600) |
CME Feeder Index
| CME Feeder Index | May 24 | Change |
| $136.04 | + 2.46 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | May 25 | Change |
| 600-700 lbs. | $163.30 | – $2.14 |
| 700-800 lbs. | $145.73 | – $4.30 |
| 800-900 lbs. | $140.62 | + $5.21 |
South Central
| Steers-Cash | May 25 | Change |
| 500-600 lbs. | $165.72 | + $1.91 |
| 600-700 lbs. | $154.82 | + $4.56 |
| 700-800 lbs. | $141.01 | + $4.19 |
Southeast
| Steers-Cash | May 25 | Change |
| 400-500 lbs. | $161.94 | – $1.62 |
| 500-600 lbs. | $153.33 | + $1.16 |
| 600-700 lbs. | $141.32 | – $0.12 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | May 25 ($/cwt) | Change |
| Choice | $227.43 | – $3.78 |
| Select | $204.62 | – $3.84 |
| Ch-Se Spread | $22.81 | – $0.94 |
Futures
| Feeder Cattle | May 25 | Change |
| May | $136.040 | + $3.815 |
| Aug | $144.925 | + $7.300 |
| Sep | $144.450 | + $6.650 |
| Oct | $144.325 | + $6.000 |
| Nov | $144.925 | + $5.600 |
| Jan ’19 | $141.825 | + $5.375 |
| Mar | $140.000 | + $5.575 |
| Apr | $139.225 | + $4.175 |
| Live Cattle | May 25 | Change |
| Jun | $104.650 | + $2.250 |
| Aug | $102.300 | + $4.075 |
| Oct | $105.825 | + $4.125 |
| Dec | $111.325 | + $3.675 |
| Feb ’19 | $114.575 | + $3.625 |
| Apr | $115.350 | + $3.475 |
| Jun | $109.125 | + $3.325 |
| Aug | $107.950 | + $2.775 |
| Oct | $108.850 | + $2.525 |
| Corn futures | May 25 | Change |
| Jul | $4.060 | + $0.036 |
| Sep | $4.150 | + $0.040 |
| Dec | $4.250 | + $0.048 |
| Mar ’19 | $4.334 | + $0.052 |
| May | $4.376 | + $0.050 |
| Jul | $4.420 | + $0.048 |
| Oil CME-WTI | May 25 | Change |
| Jul | $67.88 | – $3.49 |
| Aug | $67.78 | – $3.33 |
| Sep | $67.45 | – $3.17 |
| Oct | $67.06 | – $3.02 |
| Nov | $66.72 | – $2.85 |
| Dec | $66.36 | – $2.75 |
Equities
| Equity Indexes | May 25 | Change |
| Dow Industrial Average | 24753.09 | + 38.00 |
| NASDAQ | 7433.85 | + 79.51 |
| S&P 500 | 2721.33 | + 8.36 |
| Dollar (DXY) | 94.25 | + 0.58 |