A late week surge did not save the futures last week from the lows they set midweek, but cash cattle and the Choice cutout continued their upward tracks.
“Thanks to the surprising and active negotiated cash fed cattle trade this morning at higher money in the South, CME cattle futures have returned to the top of their trading range,” commented Cassie Fish of the Beef Report on Thursday afternoon.
“But the big take away here is that the South has taken over the lead in determining cash prices from the North this week.”
By close of trade on May 3, almost 60,000 head of negotiated cash fed cattle had been confirmed sold for the week. Prices on Thursday, when the bulk of the cattle at that point had traded, ranged from $118-128.50 (average $125.67) live and $190-200 ($195.75) dressed. This was up from the averages posted on April 27 of $122.15 live and $193.82 dressed.
As mentioned, futures crashed midweek with Tuesday’s settlements of $105.82 for the June contract and $104.07 for the August contract being called critical lows.
“Yesterday’s lows will be crucial to maintaining any possibility of additional gains,” said Andrew Gottschalk of Hedgers Edge on Wednesday morning. That day, the near-term live cattle futures did decline again. But by Thursday’s settlement, the futures prices had recovered over Tuesday’s levels. June settled at $106.52 following Thursday’s triple-digit gains, and the August contract settled at $105.52. Though up from the lows of the week, they were not higher than the settlements of April 27.
DTN’s Livestock Analyst John Harrington attributed Thursday’s surge to “stronger cash sales in Kansas and Texas, as well as aggressive short-covering.”
“Spot June managed to push back over its 40-day moving average, but couldn’t surpass Monday’s high of $107.82,” he added. “Major chart resistance sits at $109.22 (50 percent of the first-quarter break) and then at $111.50.”
The Choice beef cutout continued steadily upwards last week, seeing Thursday’s close of trade at $227.56, almost $6 above where April 27 left it. Gottschalk has said that the next level of resistance sits at $234 now that the Choice cutout has attained the near-term support level of $225.
Despite fears over the supposed incoming flood of fed cattle, beef demand factors continue to remain quite positive.
“May and June are the best demand months of the year for beef,” Gottschalk pointed out. “Given the gains in employment and wages, beef should enjoy solid demand for the grilling season.”
Feeder cattle
Cash feeder cattle were mixed last week. Prices ranges on medium and large 1-class (#1) steers weighing between 700-800 lbs. were better however, with very few offerings in the $120s or $130s. Most sales were solidly in the $140s-160s.
California: The Cattlemen’s Livestock Market had a much larger offering last week compared to the prior one with a much wider offering. Feeders were called steady however, and benchmark steers traded between $125-154.
Colorado: Feeders were mostly steady at the Winter Livestock auction in La Junta last week with the exception of 5-weights, which were up $3-5 for steers and down $5-8 for heifers. Only one group of #1, 7-weight steers sold, averaging $146.39.
Kansas: The Winter Livestock Auction of Dodge City sold more cattle last week than the week before with most steady. Seven-weight steers were up $3 and heifers over 650 lbs. were down $3. Calves of both sexes were called firm to higher on a light test. Only two lots of benchmark steers sold; the 134-head lot of 706-lb. yearlings averaged $151.61, while the 94-head lot of 761-lb. yearlings averaged $141.94.
Nebraska: The sales volume was down at the Huss Platte Valley Auction last week, but prices on feeders was called mostly steady to higher. On feeders under 600 lbs., prices were steady to up $4. Heavier steers traded steady to up $7, but heavier heifers were $3-5 lower, with the exception of 8-weights, which were up $2-4. Several lots of benchmark steers sold, with yearling lots ranging from $144-166.50 and the one small calf lot averaged $130.
New Mexico: The Clovis Livestock Auction sold more cattle last week, but prices were mixed tending towards lower. Steers under 600 lbs. were steady to down $2, while heavier steers were the opposite. Heifers were called unevenly steady to down $3, with 7-weights called down $8. Prices on benchmark steers ranged from $133.50-151.25.
Oklahoma: The OKC West-El Reno sale almost sold 14,000 head of feeder cattle over its two-day sale last week. Despite the impressive sale volume, prices were down; $1-5 on steers and $2-3 on heifers. Calves were said to have a strong undertone, but they were not well represented in the offering. Benchmark steers ranged in priced from $135-151, inclusive of calves with fleshy yearlings setting the base.
South Dakota: The Hub City Livestock Auction sold a whopping 7,450 head last week. Feeder steers sold mostly steady with heavier steers trading down $2-5. Heifers were mostly down $3-4, with the exception of 7-weights, which were steady. Two large lots of yearlings averaged $158.27 for the 390-head lot of 729-lb. steers and $147.96 for the 204-head lot of 780-lb. steers.
Wyoming: The Riverton Livestock Auction sold more cattle last week, but with very divergent prices on heifer calves. While feeder steer calves were steady to down $3, heifer calves were anywhere from down $15 to up $4 with no apparent pattern as some buyers were buying heifers as feeders and others were buying them as breeders. One 68-head lot of #1, 7-weight steer calves sold, averaging $164.50.
Near-term feeder futures fell farther and gained more over the course of last week than did their live cattle counterparts. However, while the May and August feeder contracts recovered from their Tuesday lows, they were still about $1.50 behind their April 27 settlements. The May contract settled Thursday at $140.80 and the August contract settled at $146.57. — Kerry Halladay, WLJ editor
“May and June are the best demand months of the year for beef. Given the gains in employment and wages, beef should enjoy solid demand for the grilling season.”
