Beef markets are returning to a more normal trading range with the Choice cutout down to $235.56. Packers are slowly getting beef production to a functioning, pen-clearing level. Slaughter through today was 467,000 head, 10,000 more than the prior week and just 20,000 head behind the same week last year.
Futures markets were mixed. Live cattle were sideways most of the week with June gaining 22 cents to $96.82 and August down a nickel to $96.45. Feeder cattle futures lost several dollars on the week; August lost 50 cents today to close at $132.17 and September was down 90 cents to $133.25 however, cash trade in the country is stronger.
Fed cash trade was a bit slower than last week with only 45,533 head trading on the cash market averaging $105.67 on live steers and $106.37 on heifers. Dressed trade was $168.16 on steers and $106.37 on heifers. There were a lot more formula cattle moving through the system. Today 34,300 head were priced on formula and grid; the average price was $184.27.
The Texas Panhandle negotiated cash trading has been slow on light demand. Compared to the last reported market on Wednesday, the bulk of live trades moved $4 lower at $104. In Kansas negotiated cash trading has been moderate with light to moderate demand. Compared to the last reported market Wednesday, live trades moved $1-5 lower from $103-107. Today, in Nebraska and the western Corn Belt, negotiated cash trading has been slow with light to moderate demand. In Nebraska a few dressed trades moved from $162-165, however, there were not enough live and dressed trades for a market trend. The last reported dressed market was Tuesday, June 9 with trades at $165. The week prior, live trades ranged from $110-118. In the western Corn Belt a few dressed trades moved from $162-165.
The folks at the Cattle Report said, “The rate of decline in box prices is decreasing as slaughter levels near normalized volumes. The cutout has lost almost $90 in the past week. Larger percentage moves in some cuts and especially 50 percent trim that has moved dramatically up—now dramatically down. Over-finished cattle have produced a high percent of Choice and Prime and as you might expect, lots of YG 4 and 5s.
“Retailers will begin an attempt to normalize pricing in the stores. They didn’t fully price the increases and are slowly tracking the declines. Once prices stabilize, they will be in a position to execute more planned marketing programs for beef and pork.
“Beef Feature Activity Index: More product and cheaper prices will set the stage for sponsoring beef specials for periods like the 4th of July. Much of the movement of boxed beef is sold on formula to retailers. Processors will be able to fulfill those obligations in the coming weeks. The mix of cuts offered in feature specials will be geared around traditional 4th fare of hamburgers and steaks.”
Cassie Fish in The Beef said, “Feeder cattle futures are down much harder today, trading under the 40-day moving average. Cash feeder cattle prices have begun to slip a little and knowledge that the supply of feeder cattle outside feedyards is the largest in 10 years is beginning to alter attitudes. Given that it will take months, not weeks, to work through the 800k head backlog of fed cattle, breakevens are uncomfortably high.
“Expectations for this week’s slaughter is still +650k head with further gains expected until the weekly kill stabilizes +660k. The enormous supply that will be produced at this slaughter level will pressure wholesale beef prices dramatically lower, potentially sub-$200.
“Retail beef prices for May were released by the Bureau of Labor Statistics and the all-fresh retail beef price posted a new all-time high at $7.04 per pound, up 13.2 percent from April and 19.3 percent above a year ago. Retail pork prices jumped also, both a reaction to the sharp production reduction due to COVID-19-related labor issues. Record pork production the second half of 2020 when combined with record beef production insures a softer price outlook—even with continued active exports.”
Feeder cattle markets were staying relatively strong as feedlots start getting more aggressive replenishing pens.
Winter Livestock in Pratt, KS offered 3,200 head and, compared to last week, feeder steers 800-850 lbs. and over 900 lbs. sold steady to $2 higher; steers weighing 750-800 lbs. and 850-900 lbs. sold steady to $2 lower. Feeder heifers under 750 lbs. were not well tested, however a lower undertone was noted; 750-850 lbs. heifers sold $3-5 lower; over 850 lbs. sold steady to $1 lower. Calves were not well tested. Steers weighing 764 lbs. averaged $129.28.
Ogallala Livestock Auction, Ogallala, NE, offered 7,953 head week and this was the first reported sale in several weeks, so a market trend is not applicable. However, a higher undertone was noted from the last reported sale. There was a large crowd on hand for the 13th annual customer appreciation sale, along with celebrating 69 years of business. Demand was good from a large crowd of buyers from start to finish on a warm June day. Steers weighing 775 lbs. averaged $143.66. The latest feeder cattle index was $129.38. — Pete Crow, WLJ publisher
