— Questions arise on marketings data.
— Feeders, stockers still rallying.
After showing signs of getting ready to eclipse $95 live, $152 dressed
early in the week, last week’s cash fed cattle market wound up with
only moderate trade happening through Thursday at prices barely steady
to $1 softer, compared to the previous week.
Approximately 50,000 head traded in Nebraska on Wednesday at mostly $149
dressed, $92.50, compared to mostly $149-150, $93 the previous week
In southern feeding areas, trade was nonexistent with packers still bidding
only $90-91, compared to producers’ asking prices of at least $96.
Analysts with the Texas Cattle Feeders Association said they thought that
$94 would probably get cattle traded for the week.
Market analysts said last week’s cash market turnaround was indicative
of how much influence the futures market has over the cash cattle market.
After hitting a contract high of $94.05 on Monday, the April contract
was back down to $92.45 at the close of business Wednesday. Thursday saw
the April contract remain mostly steady with Wednesday’s settle
Sources at the Chicago Mercantile Exchange (CME) told WLJ last Thursday
that the turnaround in the April contract was almost solely related to
packers not increasing their bids to levels at least steady with the majority
of the previous week’s trade. Those same sources said packers ignored
USDA’s April 1 Cattle-on-Feed Report, and that there might be more
captive supply cattle ready for immediate processing.
In addition, Andy Gottschalk, analyst with HedgersEdge.com, said he was
very skeptical of how accurate USDA’s March marketings figure was,
and there was probably more near-term slaughter-ready cattle available
than the on-feed report indicated.
“There is absolutely no correlation between USDA’s (marketing)
numbers and the actual slaughter volume for March,” Gottschalk said.
“Slaughter data is an actual known head count, as where marketings
are derived from a survey. Those surveys could be less than entirely accurate.”
Packer demand for live cattle might start to wane over the next week or
two as slaughter volumes started to show a decline last week. Between
last Monday and Thursday, 471,000 head of cattle were processed by packers,
5,000 head below the week prior and 36,000 fewer than the same week last
For the week ending April 23, 600,000 head of cattle were processed, 14,000
head more than the week previous. In addition, market analysts said that
was about 25,000 head more than the minimum number of cattle needed to
meet current beef demand.
Slaughter weights also continued to be much larger than a year ago, meaning
fewer cattle are needed to produce a similar amount of product. For the
week ending April 23, the average slaughter weight was 1,227 pounds, compared
to 1,192 the same week last year. The average carcass weight was 748 pounds,
compared to 726 in 2004.
Other indicators appeared to be positive for the cash market. However,
the futures movement on Wednesday trumped those other factors.
Last week’s boxed beef market was very bullish, with both prices
and volumes being called “very impressive” by market analysts.
Through midday Thursday, Choice beef had gained $4.45 for the week, while
Select had increased $4.56. Movement was called well above average with
Monday being the only day during the first four days of last week where
under 350 loads were moved.
Retailers were starting to purchase beef supplies for the projected demand
increase normally associated with Mother’s Day, which is May 8 this
year. Eastern retailers are also still banking on unseasonably large spring
beef demand due to consumers being “cooped up” at home for
a longer- and “stormier-than-normal” winter weather season.
Despite most cattle feeders being disappointed in last week’s fed
market developments, most sellers were still reporting $35-60 per head
profits. That helped strengthen feeder markets another $1-2 last week.
In addition, extremely wet weather permeated most central and northern
cattle grazing regions and that spurred stocker operator interest in weaned
calves, especially heifers. Seven-weight and lighter steers were up mostly
$2-5 higher, compared to several weeks previous, while some $8-10 gains
were reported on heifers.
The one area that is still being reported as dry and in need of some moisture
is the Southwest. Several auction barn reports from Texas and Oklahoma
reported stocker cattle being mostly steady to $2 higher. In addition,
volumes of cattle offered in those areas are being called 15-20 percent
larger than a year ago.
After starting out slightly stronger on Monday, last week’s nearby
corn futures lost 10-12 cents over the next few days. May corn went below
$2.04 Thursday. That news helped spur interest from cattle feeders in
heavier calves, analysts said.
In addition, while there was uncertainty surrounding USDA’s March
feedlot marketings number, there was more credence put in the drop-in
feedlot placements over the same month.
“Placement figures for last month showed that feedlots may need
to stock up on more cattle that will be ready for market come this fall,
particularly starting in October,” said Reed Marquotte, M&Z
The CME feeder cattle index, for 700- to 850-pound steers, was at $111.78
last Wednesday, up approximately $1 from the previous Wednesday. —
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