Cattle futures were unable to make any gains last week while cash trade was sluggish. Corn prices continue to dictate the market, and packers’ vise-like grip on exorbitant margins remains unyielding.
“A broad commodity selloff today mirrored the stock market declines of yesterday and moved the live cattle contract sharply lower,” the folks at the Cattle Report noted Thursday. The June contract closed Thursday at $115.60 and the August contract at $119.40.
A chunk of cash cattle traded on Tuesday and Thursday, but the bulk sold Wednesday. Live prices earlier in the week averaged $120 while dressed steers sold for $191. Wednesday saw a little more variability in price, with live steers selling anywhere from $116.50-121 and dressed steers from $188-191. Formula cattle continue to see higher premiums, selling around $190-193.
Cash trade through the week ending May 8 totaled 83,883 head, with live steers averaging $118.39 and dressed steers averaging $188.56. The Fed Cattle Exchange hosted their weekly online sale Wednesday, offering 2,469 head. Of that number, 1,588 head actually sold. High bids ranged from $119.50-120.25.
As Cassie Fish of The Beef noted, the beef packing industry continues to underperform, despite the fact that May is typically one of the largest fed cattle slaughter months. Slaughter numbers through Thursday totaled 466,000 head, a few thousand head short of the same time the week prior.
May’s first full week of slaughter is projected at 638,000 head, a few thousand head down from the week prior. Actual slaughter data from USDA for the week ending April 24 totaled 665,029 head. As of the first week of May, slaughter capacity is running at about 88-90 percent utilization.
Wholesale beef prices are continuing to see consistent gains. As of Thursday, the Choice cutout was sitting at $316.78 and the Select cutout at $295.91.
On the topic of consistent gains, packers are continuing to see extremely high margins. As of May 7, packers were making $929.48 a head, according to the Sterling Profit Tracker. In comparison, feeders were reported as making $87 a head. Just a week earlier, packers were making $668.19 while feeders were making $123.62.
“The industry badly needs a safety value to allow more beef to be processed. Super high prices for beef is not good for the industry or beef’s competitive position,” the Cattle Report said. “The last thing the industry needs is for high prices to push consumers to alternative protein offerings on the market today.”
Feeder cattle
A bearish WASDE (World Agricultural Supply and Demand Estimates) report helped feeders gain a little momentum, but it was short lived. May feeders closed Thursday at $137.45 and August at $150.50. Corn futures got knocked down about 40 cents, settling at the still-high price of $7.19.
The report estimated 95 million fewer bushels of corn ending stocks for the 2020-21 old crop, down to 1.247 billion bushels. For the new crop, USDA estimated production at 14.99 billion bushels, putting the new crop ending stocks at 1.507 billion bushels—higher than expected.
CME reported its latest Feeder Cattle Index at $131.01, a couple quarters lower from the Thursday prior.
“As the corn market plunges lower, traders seem to be growing more and more aware of how volatile the market can be when prices are as exuberant as they’ve become in corn, and have consequently stepped away from the market all together,” remarked ShayLe Stewart, DTN livestock analyst.
Kansas: Winter Livestock in Dodge City sold 2,800 head Wednesday. Compared to the last sale, feeder steers 700-950 lbs. sold $2-4 higher; steers 950-1,100 lbs. sold $4-6 higher; and steer calves 500-700 lbs. sold steady. Feeder heifers 550-800 lbs. sold $2-4 higher and heifers 800-925 lbs. sold $5-6 higher. Benchmark steers averaging 754 lbs. sold between $135-141.25.
Iowa: Russell Livestock in Russell sold 3,995 head on Monday. Compared to the last auction, steer calves under 550 lbs. sold steady to $2 lower and the heavier steers were $4 to sharply higher. Heifer calves under 600 lbs. sold $5-8 lower and heifers over 600 lbs. were steady to sharply higher. Benchmark steers averaging 777 lbs. sold between $139.50-148.
Missouri: Joplin Regional Stockyards in Carthage sold 4,000 head Monday. Compared to the last sale, feeder steers and heifers sold steady with heavier weights $2 higher. A group of steers averaging 575 lbs. sold between $163-165.
New Mexico: Roswell Livestock in Roswell sold 1,055 head on Monday. Compared to the prior sale, steer calves under 600 lbs. sold steady to $2 lower, feeders over 600 lbs. were $1 lower. Heifer calves under 600 lbs. sold $8 lower. A group of steers averaging 529 lbs. sold between $159-163.
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 6,500 head Monday. Compared to the week prior, feeder steers sold steady and feeder heifers sold steady to $2 higher. Steer calves sold $2-4 higher and heifer calves sold steady. Benchmark steers averaging 768 lbs. sold between $131-147.25.
South Dakota: Sioux Falls Regional Cattle Auction in Worthing sold 1,680 head Monday. Compared to the last sale, feeder steers 750-800 lbs. sold steady to $2 lower; 900-950 lbs. sold steady to $1 higher; feeder heifers 700-750 lbs. sold $2-5 higher; 800-850 lbs. sold $2-4 lower.
Wyoming: Torrington Livestock in Torrington sold 1,479 head Wednesday. Compared to the week prior, steer and heifer calves traded steady to $3 higher on comparable trades. Benchmark steers averaging 747 lbs. sold for $145. — Anna Miller, WLJ managing editor
