This deadly COVID-19 virus has just about everything turned on its head. Feeding America has become a huge job for everyone involved in the food chain. Cattle markets are struggling to find sustainable production levels. Packing plants across the country and in Canada are shutting down for cleaning and giving sick employees a chance to recover from the virus. County health departments have the packers under an eagle eye to make sure every employee is protected and feels safe at work.
Futures market moved higher last Thursday with April live cattle $2.10 higher to $96.82, and the June contract gained $3 to close at $87.82. Feeder cattle contracts were all green that day with April gaining $3.67 to $119.17 and May moving $4.02 higher to close at $119.60
Cash fed markets were nonexistent through last Thursday afternoon. A total 2,280 fed cattle traded at $94-95 live and $150 dressed. I wouldn’t think feeders are going to want to trade cattle below the futures mark and trade would be light after press day Friday if there is much. A total 22,800 head were priced on the formula Thursday and averaged $174.97.
Boxed beef markets moved sharply higher last Thursday with Choice gaining $5.34 to $235.87 and Select gained $3.76 to $225.98 on 112 loads. The cow beef cutout was at $182.70, down 94 cents. Trim markets have gone through the roof with 90 percent lean trading at $240.54 and 50 percent trim going to $97.36; it was under $30 three weeks ago. Ground beef is in full production as consumers hoard the stuff.
Cassie Fish at Consolidated Beef Producers discusses the beef markets in her report, saying, “Beef cutout values are barreling higher and likely just getting started. Up almost $5 for Choice at $235.30, (about $13 higher than last week’s low) and up almost $4 for Select, the lean cuts and fat trim are leading the charge. Even the rib primal is $10 off its lows as retailers respond to price and the calendar, as May draws near.
“The week ended April 4, the cutout was $232, cheaper than today, and cash cattle prices were $109. Cash cattle this week have yet to trade in any meaningful volume, but it does present a quandary. The week ended April 4 the packing industry slaughtered 631k cattle, 5k more than estimated and 501,400 of them were fed cattle. Last week plant production was arbitrarily contracted because of coronavirus-related issues with labor and the federally-inspected slaughter was only 536K. It is a fact that packer expenses have increased because of the virus and efficiencies have declined with the drop in capacity utilization in some plants last week and this week. Yet the packing industry remains profitable,” Fish writes.
“Packers are working to restore production to normal and by next week, their efforts will be recognizable and will build from there. The call to reopen parts of the U.S. for business, including food service, is gaining momentum. The pipelines that serve that segment are empty and will need product.
Packers may not need many cattle now but that will change in the coming weeks. As has been mentioned here many times, the fed kills in Q1 over-delivered and the industry could not have been in better shape on the front-end coming into this forced slaughter contraction—especially in the face of a very open winter. Still the stress of not being able to get bid or schedule cattle is real and highly frustrating. Smaller feeders in the North are perhaps feeling the pressure the greatest.
Most packers are playing it cool and waiting until tomorrow to establish this week’s cash cattle price. Where will that price be? Despite some calls for lower, steady with last week’s $105 given the strength in cutout values seems a reasonable call during these highly unusual times.”
Feeder Cattle markets were quiet last week. The major market-making auctions reported very low seasonal volume or simply didn’t sell enough cattle to report any kind of a market trend.
Superior Livestock auction held their Thursday sale and offered a lot of heifers. One group of black heifers weighing 6,675 lbs. were NHTC, vac 60 naturals and brought $138, which looked like one of the better lots sold. Calves under 500 lbs. were struggling.
The Cattle Report said on Thursday, April 16, “Many cattle will be forced off pasture in May. May is normally the end of the winter grazing season across the Southern Plains and in the South. Winter grain fields mature and grazing ends. The bunched-up groups of cattle that have not moved in March and April have been pushed to May but few people are able to hold them past.” West Coast cattlemen are also on the brink of their marketing season. Recent rains have helped extend what was looking like a very short grazing season, look for special yearling and calf sales to start soon. — Pete Crow, WLJ publisher
