Wednesday markets
Cattle markets are slowly returning to some kind of normal. Futures had a rough day as the May feeders fell of the map Wednesday, the day of convergence on this cash settled contract. May feeders were off $1.42 to close at $126 and August feeders were down $2.92 to $129. June live cattle were off just 38 cents to $98.40 and August live cattle was down $1.45 to $97.62. Futures have little relevance in price discovery at this point while cash trade is moving higher partly on the grace of two packers.
USDA reported cash trade was steady but slow in the Southern Plains, live purchases traded steady to $10 higher at $120. In Nebraska compared to the bulk last week, a few live purchases traded mostly $10 higher from $119-120, bulk at $120.
Dressed purchases compared to the bulk of last week traded steady to $10 higher from $175-190, bulk from $180-190. In the western Corn Belt a few dressed purchases traded steady to 10 higher compared to the bulk of Monday from $175-190, bulk at $190. A few live purchases traded from $114-115. There were 7,900 head priced on the formula grid at $179.86.
Slaughter for the day is expected to be 101,000 head as packers slowly ramp up production. Most beef plants are operating at 75-88 percent of capacity. Packers are expected to process around 550,000 this week.
The comprehensive boxed beef report showed that beef sales inside of 21 days was 4,210 loads, only 350 loads were for outside of 21-day delivery. In other words, not many users are buying too far ahead because of the market volatility.
The beef cutout values have dropped dramatically now that production is rising. Choice boxed beef was down $5.43 for the day to $404.04. Select was down $2.31 to $391.18 on a respectable 155 loads. The 90 percent lean trim is a bright spot and is still trading over $313.93, not falling at all with the rest of the cutout. However, the 50-50 trim has dropped dramatically to $155.75. It was trading over $300 last week.
With Memorial Day coming up Cassie Fish said in The Beef, “Fish and Pork are stealing the retail protein feature space this week with lots of ribs for Memorial Day on sale. Expect a lot of competitive pressure from pork and chicken over the coming weeks and months due to much cheaper wholesale prices and greater availability.
“Beef will have to fight its way back into spotlight over the summer as retail prices will stay high. Retailers will want to see a much larger and consistent beef supply and wholesale prices another 30-40 percent lower before comfort returns and results in featuring beef.
“Wholesale beef prices for the week are down $68 on Choice, led by plunging ends and trim. Expect wholesale prices to trend lower for an extended period, the market hitting a few plateaus as it returns to sub-$300.”
The Cattle Report said, “Small purchases continued in the north where live trades were from $115-120 and dressed sales from $180-190, basically steady with last week. The online exchange posted -0- sales with cattle offered at $115 drawing no bids. The slaughter volume also improved 18,000 over last week. Expectations are for slaughter to post around 530,000 this week—a slowdown in the rate of improvement, but still headed the right direction.
“President Donald Trump said on Tuesday the United States should consider terminating trade deals under which it imports cattle as he looks to help U.S. ranchers hit hard by the coronavirus outbreak. The President seemed to be referring to live cattle, but addressing this issue raises an important pathway for dealing with the glut of cattle ready for the beef plant.
“The U.S. should wait until the end of this month when plants have restored much of the slaughter volumes and restrict beef imports. The United States imports almost as much beef as it exports, but the profile of the type of beef is entirely different from exported beef. We import mostly lower quality beef often used in the grind while the export market is for high value cuts.”
Hub City Auction in Aberdeen, SD offered 5,588 head Wednesday and reported compared to last week: steers 600-700 lbs. mostly steady; 701-750 lbs. $4-6 higher; 751-850 lbs. mostly steady; and 851-950 lbs. $2-4 higher.
Best test on heifers 500-600 lbs. at $2-4 higher. There was moderate to good demand for this large offering featuring many packages and loads including quite a few weaned fall calves and replacement quality heifers. Light calves, especially those under 600 lbs., saw very good demand.
Quality was mostly average to attractive this week and flesh varied, from light to moderate plus with some heavy flesh at times. Market activity was mostly active with many order buyers attending the auction, as well as producers interested in procuring replacement heifers.
The feeder cattle summary from Nebraska reported compared to last week, steers under 750 lbs. sold $5-10 higher, over 750 lbs. sold steady to $5 higher. Heifers sold steady to $5 higher. Demand was moderate to good for calves, feeder cattle and fall bred cows. There was also good demand for cow/calf pairs.
Some of the baby calves had a spring vaccination. Cooler than normal temperatures and a couple of freezes has kept early spring grass and alfalfa growing at a snail’s pace at best. Over the next weeks, temps are more seasonal and summer grass should grow in leaps and bounds, especially if a nice spring shower comes along.
On the West Coast, special calf and yearling sales are underway with good volume. Turlock Livestock Auction offered 2,942 head at their May 16special sale, calves traded between $130-144 and yearling feeders were trading between $108-118. The latest CME Feeder Cattle Index was at $126.88. — Pete Crow, WLJ publisher
