Softer offerings and natural seasonality took some of the steam out of the cattle markets this week.

Feeder cattle and calves sold mostly steady to $2 lower across much of the country, but mostly steady to $2 higher in the Southeast, according to the Agricultural Marketing Service (AMS).

Feeder Cattle futures were an average of 70¢ lower week-to-week on Thursday (futures and financial markets were closed Friday in observance of Good Friday). The exceptions were 27¢ higher in spot Apr and 75¢ to $2.05 higher in the back two contracts.

“Record prices have leveled off the last couple of weeks with the fed cattle market struggling to hold its ground and most of the more aggressive stocker orders having been filled,” AMS analysts explained Friday.

“Ten days ago, packers were short bought and now they're not,” John Otte, Penton market analyst, explained Friday. “That means they don’t need to chase supplies. That's letting cash fed cattle prices drift lower, which pressures fed cattle futures.”
Cash fed cattle trade was light again this week at prices $1-$2 lower. Live prices were $146-$148/cwt. and $238-$240 in the beef.

Except for 20¢ higher in spot Apr, Live Cattle futures were an average of 71¢ lower week-to-week on Thursday.

“Slippage in cash fed cattle prices and variable weather creating a shaky start to grilling season let fed cattle futures drift lower,” Otte says. “Sharply lower 2013-crop feed costs and pricey fed cattle spurred winter feedlot placements (see “Feedlots Gain Profit Ground … For Now”). The market sees larger summer fed cattle supplies coming, which keeps pressure on prices.”

“Fed cattle and beef prices may have reached their seasonal peaks,” say analysts with USDA’s Economic Research Service (ERS) in the April Livestock, Dairy and Poultry Outlook. “Any declines would diminish price support for heavier feeder cattle despite dwindling supplies.”

After three weeks of declines, Choice boxed beef cutout value increased $4.23/cwt. week-to-week. Select was $2.77 higher.

“With boxed beef prices down sharply from the second rollercoaster high of the year, fed cattle prices may have peaked seasonally,” says Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in his weekly market comments. “Cattle slaughter typically increases from April through May to seasonal peaks in June. Fed cattle prices typically decrease from April peaks to summer lows in July. Average price change from current market levels would suggest that fed prices could drop to around $140/cwt. by July. Given some bunching of placements in the past couple of months, it would not be surprising to see fed prices drop into the mid $130s, at least briefly, for a summer low. Beef demand, as expressed by wholesale and retail beef prices, will be key through this seasonal supply increase.”

According to ERS analysts, Choice retail beef prices increased 4% from $5.35/lb. in January of this year to $5.58 in February. All-fresh beef prices increased by almost 5%, from $5.04 to $5.28/lb. over the same period.

“However, low supplies of market-ready fed cattle are constraining slaughter at successively lower levels, and it is not inconceivable that consumers could begin to look for alternative protein sources with beef prices at record levels,” ERS analysts say. “Pork and poultry prices are also increasing, but remain lower than beef. High prices for all meats and poultry could drive grilling season away from the higher priced beef cuts toward ground beef, pork, and poultry.”

“Several factors may contribute to weaker feeder prices in the coming weeks,” Peel says. “Persistent drought conditions and delayed spring temperatures are both contributing to growing concern about forage conditions (see “Market Dynamics Will Follow Early-Season Moisture”). “At the same time, delays in corn planting, along with USDA estimates for smaller corn acreage and tighter old crop corn supplies have firmed corn prices.”

Still, Otte pointed out earlier this week, “Supplies remain historically small, so no reason exists to expect the cash market to break sharply any time soon. Plus, feeder cattle supplies outside of feedlots remain tight, which continues to underpin the market into autumn and next year.”
 

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