Markets slow to develop
Boxed beef markets turned softer today with Choice falling to $206.13 and Select down to $203.73 on moderate trade volume. Slaughter for the week is already 11,000 head behind last week’s pace; slaughter estimates for this week are around 620,000 head. No cash trade has been reported today. Southern feeders have opened offerings at $122.00 so feeders are looking for a better week. Packers will more than likely lower production to raise boxed beef prices to maintain margins.
ShayLe Stewart, DTN livestock analyst, reported that “February live cattle futures were up $0.45 at $121.27, April live cattle are up $0.15 at $120.47 and June live cattle are up $0.20 at $112.10. “It’s seeming that the week may be back to a more usual trade pattern with live cattle trading in the later part of the week,” she said. “The countryside is quiet with no firm prices established, however, there were a few scattered asking prices in Texas at $122. Cutout values are expected to rise from here on out and knowing that packers are short bought on cattle, it wouldn’t be surprising to see the market’s positivity trickle into the cash market later this week.
“Feeder cattle prices were stronger throughout sales barns last week as availability for certain weight cattle are becoming harder to locate. Weather will be a big factor moving forward on how sale barn prices perform because whenever cattle are dirty from wet conditions, prices see a small dip and obviously the ease of getting cattle to the ring depends on road conditions. The feeder cattle futures market is still pressing forward for gains as the noon hour approaches. March feeders are up $0.65 at $139.17, April feeders are up $0.37 at $141.75 and May feeders are up $0.35 at $143.55.”
Ft. Pierre Livestock in South Dakota had a good run yesterday, offering 5,901 head. Light weight steers in the 400-500-lb. range were trading between $175 and $210 while 700-800=lb. steers were trading between $146 to $160.
Cassie Fish at Consolidated Beef Producers said that “The rally staged by CME cattle futures last Thursday and Friday was decisive, big and game changing. Finally, the choke hold of managed fund liquidation was lifted, the selling exhausting itself and futures prices rising quickly and powerfully as a result.
“Today, the first of this holiday-shortened week, has seen futures trade both sides of steady in quiet trade, the market seeming to catch its breath,” she reports.
“Fundamental news is positive, following last week’s futures strength and keying off of the seasonal low. Cutout values are expected to be higher this week and going forward. Last week’s USDA Comprehensive Cutout report showed brisk volume, especially in spot and formula sales. Prices dipped near the low for the year, made last month. For Choice product, prices dropped to a new low for the year, a common occurrence in February.
“Last week’s FI slaughter was 620k head, the smallest weekly kill of 2020, quite common for February, though it was still 12k head larger than a year ago. This week’s kill is estimated at 610 head, compared to 581k head a year ago. This slaughter reduction is supporting the seasonal bottom in the cutout. Demand is starting to surface already for Easter ribs and other seasonal items. Easter is less than eight weeks away.
“Expectations for this week’s negotiated cash cattle trade is generally $2 higher at $121. Last week was the second consecutive week of very small negotiated trade volume. At least one packer was pulling cattle bought Friday for today.
“The seasonal trend is very strong for cash cattle prices to rally well into March. With beef demand solid and rising cutout values likely to inspire slaughter levels to continue to exceed any year since 2011, the need for fed cattle to replenish inventories will be significant. Will prices come close to the $130 reached the last two years? Perhaps not given the open winter. But prices have a good shot at a new high for the year, testing and potentially exceeding the $125 top made in early January.”