Cash fed cattle prices gained as much as $4 this week to reach a record-high $154/cwt. in the Northern Plains.
“Fed cattle prices were expected to drift lower in late March and April on improving weather conditions and seasonally higher supplies of market-ready cattle. So far, however, feedlot supplies remain current and cold weather continues to impact availability,” say Steve Meyer and Len Steiner in Thursday’s Daily Livestock Report.
“Stronger-than-expected fed cattle prices so far this year have encouraged feedlots to market cattle aggressively and to place more cattle on feed,” Derrell Peel, Oklahoma State University Extension livestock marketing specialist, explained in his market comments this week. He notes that February placements were up 15% from the low placement total of last year.
In fact, Peel explains, “Feedlots have placed more cattle four of the past five months, resulting in nearly 600,000 more head of cattle placed compared to the same period one year ago. Relatively large placements in January and February have pushed the March 1 feedlot inventory to an unusual March seasonal peak.”
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Rather than suggesting a late peak in fed cattle marketings or bunching of cattle heading into the normal seasonal marketing peak of June, Peel says, “Based on the placement weights, it does not appear that the late March peak in feedlot inventories will result in a late peak in marketings. In fact, my current projections suggest that May marketings will be seasonally strong and may be as large or larger than June marketings.”
Moreover, Peel explains the current incentive to pull feedlot cattle forward will likely continue into April and may extend far enough to pull some May cattle into April.
“Cold and variable weather in March continues to negatively impact animal performance and the impacts may stretch into April,” Peel explains. “All in all, the recent increase in placements suggests only a modest increase in seasonal marketings into May and June. This may add some seasonal price pressure to fed markets going into summer. However, from the current $150/cwt. spring top, such pressure would not likely push summer fed cattle prices below the mid $130s/cwt.”
Meyer and Steiner point out there are other factors unique to this year that are adding support to beef wholesale values. Chief among them is reduced pork production and significantly higher pork prices than expected when the year began (see “Pork Production Remains Murky”).
“Normally, the beef cutout tends to decline between mid May and the end of July,” Meyer and Steiner say. “Seasonally, cattle slaughter increases, while beef demand tends to soften somewhat as summer heat takes its toll on consumer consumption patterns. The increase in cattle placements in the November-February period should eventually show up in the cattle numbers coming to market during the summer months.”
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