Cattle markets appear to have stabilized, for now. After President Donald Trump’s order that packing houses stay open as he invoked the Defense Production Act, markets seemed to calm. Futures markets were mostly higher on live cattle and down on feeders. The April live cattle dropped off the board at $90, up $4.40. June was $1.65 higher to $85.95, and August was $1.32 higher to close at $92.10. April feeders also dropped off at $119.17 and settled against the CME Feeder Cattle Index, which was $118.79. May feeders were $145 lower to close at $117.10.
Cash trade in the country was slow, which is expected after packers were forced to close plants or slow down processing. There were only 80,000 head processed last Thursday. The week until then had only 301,000 head processed compared to same period the week before, at 339,000, and last year’s rate of 485,000. There were 16,400 head delivered on formula grid trade, averaging $164.60. Meanwhile light country trade was fetching $95-100 live and $150-160 dressed. Steers averaged $96.36 live and dressed trade was $154.79.
The beef cutout continues to soar along with all meats. The Choice traded at $367.56, $10.18 higher and Select was $10.25 higher at $350.16. The 90 percent lean trim was trading at $255.32, with no quote available on 50 percent trim, but the cow beef cutout was $6.67 higher to $184.18. Cattle are grading very well with the extra time they’re getting on feed. Dressing percentages are moving higher. The industry produced 11.9 percent Prime, 72.6 percent Choice and only 7.9 percent Select, while 7.5 percent fell into the Utility grade.
Cassie Fish, in The Beef, reported, “CME live cattle futures action is very quiet today. Is the potential of improving packing plant production supportive, or is the developing backlog of market-ready cattle bearish? Traders seem uncertain and the market has spent the day trading both sides of steady.
“Spot Apr live cattle expires at noon and though it is higher, the price is $5 below the lowest live price paid this week. The highest it can expire is $90.60. Since physical deliveries today, if there are any, will proceed well into mid-May, perhaps the discount to this week’s cash is warranted. If the contract was cash settled, that would not be the case since this week’s average will likely be near $95 at worse,” Fish writes.
“Open interest did increase yesterday but in general OI is staying near the lows. The percentage of managed fund longs exceeds that of managed fund shorts by a few thousand contracts but the two combined make up only 22 percent of the OI as of a week ago Tuesday. Commercial longs which are usually beef cut related positions, make up 15 percent. Perhaps the funds have left cattle futures following the 36 percent break in less than three months. With less managed fund participation, will the contract see less volatility and its trade more influenced by fundamentals?
“The Executive Order by the White House to ‘keep packing plants open’ was followed by an announcement by USDA Secretary of Agriculture Sonny Perdue that plants would open in ‘days’ not ‘weeks.’ At the same time, this week’s cattle slaughter estimate has eroded all week, now sub-440k head, possibly dipping near 400k. That would be 273k head fewer than a year ago. “Most beef plants are already open, just operating at limited through-put.
“USDA just released its actual slaughter for week ended April 18 and the number fell short of the estimate by 16k head. The 486k cattle slaughter for that week marks what was the first sub-500k head kill, instead of the week that followed, a very disappointing fact,” Fish opines.
“Steer carcass weights for that week were uncharacteristically up 3 pounds at 889 pounds, 19 pounds over the 2016, the prior highest carcass weight for that same week in history.”
Feeder cattle markets were starting to see more cattle show up. On the West Coast the calf and yearling runs are starting to get underway. Wheat grass cattle are starting to move. But feeders are reluctant buyers on replacement cattle
The Clovis Livestock Auction, Clovis, NM, offered 1,500 head and compared to the last week: Steer calves under 600 lbs. were unevenly steady to $2 lower; feeder steers over 600 lbs. were mostly steady to $1 lower, except 800-900 lb. feeder steers which were mostly $3-5 higher, with instances of $9 higher though quality and condition were more attractive. Heifer calves under 600 lbs. were unevenly steady to instances of $3 lower. Feeders over 600 lbs. were mostly $1 lower. Slaughter cows were steady, bulls were $2 lower though quality was not as attractive. Trade was moderate to active, demand was moderate. Benchmark steers weighing 733 pounds brought $118.00.
Napoleon Livestock in Logan County, ND, offered 4,190 head for sale last week, and compared to the week before, feeder steers weighing 550-850 lbs. were $1-6 lower, and 850-900-lb. steers were $8-9 lower. Feeder heifers weighing 550-600 lbs. were $2-3 lower, 650-700-lb. heifers were $3-7 higher. Not all weights were well-tested for comparison, especially in heifer weights. Many strings of heifers were available in Thursday’s offerings amid good buyer demand. Flesh condition was characterized as light to moderate. Benchmark steers weighing 723 lbs. brought $141.52. —Pete Crow, WLJ publisher
