Everything was slow or a bit low last week. Next to no cash trade had occurred by Thursday—3,380 head were confirmed sold for the week at that point at $153 live and $242 dressed—and the cutout was sharply lower as packers struggled with negative margins and slack demand.
As corn prices steadily fall as word of a record corn crop grows with every telling, animal ag producers rejoice. Cheap corn means cheap feed. Cheap feed means better margins for those raising livestock that eat corn.
Cash fed trade was slow to develop last week as packers were trying to mitigate recently very red margins and everyone was collectively holding their breath for the Friday release of the Cattle on Feed report. Even by Thursday, bids were limited to $155-156 live in the Southern Plains and $242-244 dressed in the Corn Belt.
The cash fed trade last week was slow, but this was not surprising. Analysts expected packers to hold off buying cattle until the release of the World Agricultural Supply and Demand Estimates (WAS- DE) on Thursday, and that seemed to work out for them, though not because of WASDE.
U.S. red meat exports slowed in July, the first time this year that year-over-year export volumes were lower for both beef and pork. But 2014 exports remain on a strong pace, according to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF).
Very light trade developed Wednesday at $158-160 live in Minnesota and $250 dressed in Nebraska and Iowa, but at levels too low to set the week’s trend. Still, the early trade at $3-5 higher live and $5-8 higher dressed caught the market’s attention. Live futures closed strong on Wednesday and followed suit on Thursday.
The National Restaurant Association’s Restaurant Performance Index (RPI) for July was released at the end of August. The index registered a modest decline in July as a result of a dampened outlook among restaurant operators.
“However, I believe we get past Labor Day and further into the month of September and the market will be dealing with increased supplies of competing proteins and heavier carcass weights. This likely resumes the recent downtrend in cash cattle prices from the historic highs posted earlier [in August].
“One operation we tracked had heifers weaned in 2010 and 2011, what those heifers were and what their accumulated expenses were over the two years to the point where they were heavy bred. Their expenses totaled $1,100-1,400 a head. That ranch was pretty efficient and did a good job of reducing their expenses.