Calf and feeder prices surge higher
Snug harvest-ready cattle supplies continue to bolster markets, helped along by increasing feedlot marketing currentness, which is helping to keep a lid on carcass weights. Steers and heifers traded steady to $7 per cwt higher, according to the Agricultural Marketing Service.
March 25, 2017
Seasonally and cyclically snug harvest-ready cattle supplies continue to bolster markets, helped along by increasing feedlot marketing currentness, which is helping to keep a lid on carcass weights.
Overall, steers and heifers traded steady to $7 per cwt higher, according to the Agricultural Marketing Service (AMS): steady to $4 higher early in the week and then $3-$7 higher.
It was Superior’s Wednesday Fed Cattle Exchange that seemed to spark added optimism. The weighted average of $133.35 per cwt on 2,195 head was $2-$5 higher than negotiated trade the previous week.
Already simmering, cattle futures charged higher, finally making some fundamental sense and feeling like old times when some of us could at least make believe that we thought we understood what was going on.
Feeder Cattle futures closed an average of $4.23 higher week to week on Friday ($2.05 to $5.22 higher).
Live Cattle futures were an average of $2.13 higher week to week ($1.00 to $3.17 higher).
Stronger cash and futures prices were also reflected in forward sales of calves and feeder cattle. Consider this week’s Superior Livestock video auction. The average price of $132.13 for May delivery on 700 head of Medium and Large #1 steers from the South Central region mirrored prices paid for the same weight and class sold at cash auctions this week.
“It is possible that the current market strength is more than just a seasonal first-quarter price rally,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Domestic beef demand appears to be continuing stronger though March data are not yet available. However, February retail beef prices were stronger with both retail Choice and all-fresh beef prices higher. The ratio of retail all-fresh beef price to poultry price increased in February despite a slight increase in poultry prices as well. Retail pork prices were also higher in February.”
Even with higher wholesale beef values, sales of boxed beef more than 21 days out continue to run ahead of last year. Last week, there were 1,105 negotiated loads reported for delivery 22 days ahead and more, according to USDA’s National Comprehensive Boxed Beef cutout report. There were 687 loads reported during the same period last year. For perspective, a total of 6,546 loads were reported last week compared to 6,067 the same week last year.
So, markets appear positioned as favorably as possible ahead of inevitable supply increases.
“As increases in meat production outpace increases in meat exports, the domestic market will have more meat available,” say analysts with the Food and Agricultural Policy Institute at the University of Missouri, in the recent 2017 U.S. Baseline Briefing Book. “This will limit the volatility in projected prices relative to the volatility exhibited between 2013 and 2016. If demand strength deteriorates or feed prices rise unexpectedly, the financial situation for livestock producers could become very difficult in a short amount of time.”
The latter part of the week served as a reminder.
After the bullish line in the dirt drawn by Wednesday’s fed cattle auction, packers and cattle feeders mostly were at an impasse for country trade. A smattering of live sales were reported from $131-$136, including $133 in the western Corn Belt and $134.50 in Nebraska for delivery at 1-14 and 15-30 days. Likewise, there was a smattering of dressed sales at $215 in Nebraska. But, there were too few transactions to trend. Live sales the previous week were at mostly $128-$132 with dressed trade at mostly $210.
Although still at their highest levels since last June, wholesale beef values lost some steam as the week progressed. Choice boxed beef cutout value was $1.81 lower week to week at $221.62 per cwt on Friday. Select was $1.07 higher at $215.55.