Friday’s monthly Cattle on Feed report should offer some overall support to the market heading into next week. March placements were 4.7% less than the previous year compared to analyst estimates ahead of the report for an increase of 1.7%
Despite the toppy feel to the market, and a high percentage of the current offering being new-crop calves, analysts with the Agricultural Marketing Service (AMS) said Friday, “It’s hard to call demand any lighter as cattle buyers remain active for all classes of
Feeder calves traded mostly unevenly steady this week, while yearling feeder cattle continued to march ahead at steady money to $3/cwt. higher.
“There are a few producers out there who have likely been waiting for calf prices to fall off the spring high before making any purchases which may be what is supporting calf prices at this time,” explained Andrew P. Griffith, University of Tennessee agricultural economist, in his market comments Friday.
Feeder Cattle futures increased an average of $4.26 from last week’s market close on Thursday to Friday’s close this week. The CME Feeder Cattle Index ended the week at $179.10, just about a buck shy of the record established earlier this month.
Cash fed cattle struggled to gain a foothold. Some early sales in the Texas Panhandle were reported $1/cwt. lower late Friday afternoon at $145/cwt. But Live Cattle futures increased an average of $2.09 from last week’s market close. That was due in part to the resilience of the rollercoaster wholesale beef market, which turned sharply higher again this week (see “Meat Supply Supports Cattle And Beef Prices”).
Here, on the outskirts of grilling season, Choice boxed-beef cutout value was $6.48/cwt. higher week-to-week at $232.83/cwt. And that was after declining 97¢ on Friday. Select was $6.41 higher at $221.64. The Choice-Select spread was virtually unchanged at $11.19/cwt.
“The leverage in the fed cattle market appears to continue shifting from the feeder to the packer this week, which is expected,” Griffith says. “Fed cattle supplies will seasonally increase in coming weeks, which will provide the leverage to drive fed cattle prices lower. If fed cattle prices decline as is seasonally expected, feedlot managers may find it difficult to pencil in profits on animals currently being placed and those placed in previous months.”
Friday’s monthly Cattle on Feed report should offer some overall support to the market heading into next week.
The average guess of analysts for the April 1 inventory was for it to be 0.5% more than a year earlier. At 10.86 million head, according to the National Agricultural Statistics Service, the inventory is 0.6% less than a year earlier. Heifers and heifer calves on feed (3.71 million head) are 6% less than a year earlier.
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Placements in March of 1.80 million head are 4.7% less than a year earlier. Although analyst estimates varied over a wide range ahead of the report, the average prediction was for an increase of 1.7%
March marketing of 1.66 million head was 3.7% less than a year earlier, the least since the series began in 1996. The average estimate ahead of the report was for a decline of 3.4%
“Cattle numbers coming to town appear relatively strong compared to previous years. This may seem an anomaly since there are fewer cattle,” Griffith says. “However, record prices tend to spur producers to bring animals to town earlier than normal. Pulling these calves forward in early spring will likely further tighten cattle supplies during the summer months. A decline in cattle receipts will likely support cattle prices to some degree but to what extent is unknown.”
The bigger unknown is the weather, Griffith says. “Weather will be a key factor, as it always is, in supporting or providing resistance to cattle prices. The ability of pastures to maintain sufficient forage growth, as well as producers’ ability to harvest hay, will be a determining factor of how many cattle stay at home. Similarly, the weather’s impact on grain production will be a key driver for cattle prices as a less than trend line corn harvest could negatively impact feeder cattle prices.”
The opinions of Wes Ishmael do not necessarily reflect those of beefmagazine.com or the Penton Farm Progress Group.
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