Cattle prices continue struggling with weak packer and wholesaler demand.
Nearly a month after shuttering its Plainview, TX, packing plant, Cargill looks more than prescient.
Based on carcass cutout values and weekly boxed beef sales, consumers have little appetite for more beef at higher prices (see "Beef Consumption-Demand Struggle").
Boxed-beef cutout value traded either side of even and about $20/cwt. shy of getting close to packer and feedlot profitability by many estimates.
Total box beef volume (6,192 loads) for the week ending Feb 16 (most recent Monday-to-Monday) was the lowest non-holiday trade volume since July 2009, according to Ed Czerwien with USDA Market News in Amarillo.
“This is especially tough since we dropped the cutout over $10/cwt. since December,” Czerwien says. “The most recent 10-week rolling average of boxed-beef sales was 6,655 loads per week, which compares to almost 7,300 loads per week last year at this same time. That difference of over 600 loads per week has been going on since last summer.”
For perspective, Czerwien explains, that weekly disparity of 600+ loads each week is equivalent to about 36,000 head of cattle weekly, figuring it takes 60-70 head to produce a single load of boxed beef.
Cash and futures markets reflected the demand concerns.
Cash fed cattle struggled to trade for steady money ($123/cwt. live) in the Southern Plains on light volume. Light trade in the Northern Plains was reported late Friday at $198/cwt, which was $2 higher than the previous week.
Spot Feb Live Cattle futures closed about even week-to-week thanks to a $1.05 bounce higher Friday. They closed an average of $1.94 lower for summer contracts, though; an average of $1.19 lower the rest of the way (75¢ to $1.60 lower).
Cash feeder cattle and calves traded unevenly steady, mostly within a range from $3 higher to $3 lower, according to the Agricultural Marketing Service (AMS) Friday.
“Receipts were much lighter, early in the week because of the lower price levels and late in the week due to the huge winter storm the covered the entire central portion of the U.S.,” AMS analysts explained Friday. “Some bottom-side support was found in auction markets through Wednesday, especially on 600- to 800-lb., long-weaned calves and light yearlings with a condition that would allow them to perform well on any type ration whether it be in a feedlot, growing yard, or on pasture.”
The widespread storm dumped plenty of snow across a wide swath of drought-stricken country, boosting hopes at some late-week auctions.
“Heavy snow (4-12 in.) across the trade area made for light receipts and stiff competition for summer grazing calves,” according to the AMS reporter at Dalhart Livestock Auction in Texas Thursday where steers weighing less than 550 lbs. sold firm and heifers weighing less than 550 lbs. sold firm to $3 higher.
Week-to-week, though, Feeder Cattle futures were down an average of $2.51 through the first six contracts; down an average of $1.65 at the back of the board. And that was with a bounce higher of an average 73¢ across most of the board Friday.
At 140.62, the CME Feeder Cattle Index closed at its lowest point since last September.
Heading into next week, it will be interesting to see how the trade digests Friday’s monthly Cattle on Feed report.
According to the report, cattle on feed Feb. 1 (11.1 million) was 6% less than last year. That’s about dead-even with the average pre-report estimate of 6.2%.
Placements in January (1.88 million head) were 2% more than last year. Heading into the report, average estimates were for placements to be about even.
Marketings in January (1.92 million head) were 6% more than the same time last year. The average estimate ahead of the report was for increased marketing of 4.7%.