Cash cattle prices and futures finally rallied last week on USDA projections for a record-large corn crop.
Boom, just like that.
Feeder Cattle futures ended the holiday-shortened week limit-up. Most of what was a light offering of yearling feeder cattle sold steady to $5 higher at auction. Cash fed cattle gained $2-$4 on a live basis ($127-$129/cwt.) and $4-$6 on a dressed basis ($202-$204/cwt.). That was despite Choice boxed beef cutout value trading $2.28/cwt. lower week to week (Friday), and Select trading $3.90/cwt. lower.
Just a week earlier, the market reporter for Superior’s video auction noted, “Many buyers have seen enough red ink that they are not buying replacement cattle for their empty pens unless they can lock some sort of reasonable breakeven into their purchases...”
Part of the surge was fueled by the previous week’s Cattle on Feed report that pegged February placements 14% below the previous year.
Mostly, last week’s rally centered on the bounty projected by Thursday’s USDA Prospective Plantings and quarterly Grain Stocks reports (see "Corn Crop Could Be Record-Large"). That news pummeled CME Corn futures limit down 40¢ for old-crop corn.
Until then, calves traded unevenly steady to $5 lower at auction, with stiffer declines on lightweight calves in the Southeast, according to the Agricultural Marketing Service (AMS). AMS analysts note the previous weekend’s widespread snowstorm helped curb consignments.
Following the crop and stocks reports, AMS analysts say, “Word spread instantly and trading became active in Thursday sale barns like Ogallala, NE; Dalhart, TX; Salina, KS; and even in the still-parched areas of southwest Kansas…”
Although questions remain about short-term market strength (see "Beef Demand Will Determine Supply-Side Price Strength"), AMS analysts said Friday, “March 28th is when the feeder and stocker cattle market found a bottom with a springboard to bring demand and attitudes out from under the cloud that has plagued them since right after the first of the year… Now, severely dwindling calf and yearling supplies are armed with the arrival of spring and its warmer days, greener pastures, and the annual lighting of the backyard grill. The glimmer of hope for at least some relief in feed costs is slim but nearby corn contracts fell below $7/bu. for the first time in over a month, and Good Friday’s closing prevented moods from changing until next week.”
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