Now legislators are attempting to get their pet bills in the appropriations process, including the Opportunities for Fairness in Farming Act, and Sen. Josh Hawley (R-MO) just introduced the Strengthening Antitrust Enforcement for Meatpacking Act, which amends the Packers and Stockyards Act and is intended to measure and stop any monopolistic activity in the meatpacking sector.
Meanwhile, cattle markets are charging along. There isn’t as much of a disparity between southern and northern cattle prices: $183 in the South and $186 in the North. Future markets had a big rally late in the week, supporting higher cash prices, but gave some of it back early last week. October live cattle were trading in the $186 range, which may support even higher fed cash prices.
Beef demand over Labor Day was disappointing—packers are trying to support cutout values with lower production levels; packer margins are near zero. Fed cattle supplies are starting to grow and the poor marketings in August will start adding to the front-end supply of finished cattle. Right now, packers seem to pay the most for heavyweight steers, 1,500 pounds. Soon, packers will start processing for the holiday middle meat markets and slaughter levels should pick up seasonally.
The boys at HedgersEdge are telling tell us, “Front-end fed cattle supplies project to exceed year ago levels during the fourth quarter as a result of lower-than-projected harvest rates during the past several months. This lighter harvesting has also added to front-end fed cattle supplies during the fourth quarter. Last week’s harvest level was reported at 632,000 head, down 6.1% from the prior year. The harvest level this week may be challenged to exceed 625,000. Seasonally, improving beef demand during the fourth quarter should offset the expected increase in front-end fed cattle supplies. Carcass weights for steers are 2 pounds above a year ago, while heifer weights remain 2 pounds below a year ago. Average carcass weights (inclusive of cows) are equal to the prior year due to fewer cows in the harvest mix. YTD total cow harvest is down 257,600. For the balance of this month, weekly harvest levels should be able to challenge 625,000. Harvest YTD is 1,026,000 below a year ago, with approximately one-fourth of the drop due to reduced cow harvest.”
Roughly 60% of the beef consumed in the U.S. is ground beef. The ground beef markets are at record levels with the 90% trim trading at $312.29, and the 50% lean trading at $124.51. With the current beef supply situation, beef imports are rising to meet ground beef demand.
The big calf runs should be starting and the folks at the Cattle Report made some good observations. “Relief from the intense heat and humidity of the past few weeks is here bringing with it needed moisture. The timing is good for setting the stage for winter grazing. Stocker operators will be challenged with nosebleed levels of prices on light calves for grazing. Hanging in the background is the prospect for a severe winter in the southern Plains. While northern feeding locations suffered last winter, the last few winters have been mild in the southern Plains.
“The spread between weaned and unweaned calves is beginning to widen. Many operators are aware of the health risks present in unweaned calves this time of year and representations by sellers sometimes are misleading. A 30-40 day weaned calf sometimes means very little. Even longer weaned periods sometimes come with risks. The variances between daytime highs and nighttime lows can create dangerous pathogens in the animals.
“Auction markets are a perfect location for testing the spreads between weight classes of cattle. Cattle of similar flesh and quality but of varying weight sell for different prices and those differences set established trade standards for country trading of cattle and accompanying slides up and down for weight differences. Traditional slides have been established and applied to the final weights at delivery. The recent rise in stocker and feeder prices will force those industry standard slides to move higher to properly accounts for true value. Sellers will resist larger slide and may be in a position to prevail this year.”
The Cattle on Feed report was expected to show 2.4%fewer cattle on feed, placements down 6.4% and marketings down 5.6%. The beef cutout is in position to violate the support level of $302. — PETE CROW
