Bull sale season is winding down and it has been remarkable for purebred breeders. It’s times like these that provide a great amount of genetic improvement in performance and product quality. The industry has done a remarkable job improving beef quality.
Cattle markets are starting to improve after a bunch of bad news with the bird flu and the geopolitical situation. Futures markets appear to have stabilized, and the cash fed cattle market is trading at a premium to futures. It looks like fed trade will be around the $185 level. Feeder cattle are still selling well. A set of steers from the Nottingham Ranch in Toponas, CO, sold in Torrington, WY, at 567 pounds for $344/cwt. These are good, reputation cattle.
The Cattle on Feed report for April 1 was expected to show cattle on feed at 102% of last year. Packers are just now starting to process 600,000-plus head of cattle a week. This processing slowdown has caused a backup in front-end supplies, which I hope we can clear out with Mother’s Day, Memorial Day and Father’s Day, which are typically large beef consumption holidays.
The Choice beef cutout has drifted below $300, which should stimulate some wholesale buying. Most analysts expect it to advance going forward. The Prime premium is $25 over Choice but the Select discount is at $5—it would appear that consumers are trading down. However, the Cattle on Feed report is expected to show marketings at 88% from last year. Packers are doing everything they can to minimize the red ink which is around a negative $65 per head.
The last beef production report, ending Apr 13,showed estimated steer and heifer dressed weights decreased 2 lbs. to 847 lbs., which is 28 lbs. more than last year and 23.4 lbs. more than the five-year average. Beef production was estimated at 509.8 million lbs. versus 499.7 million lbs. last year and 509.1 million lbs. for the five-year average. So we are making up for tonnage by processing bigger cattle.
Cattle feeders are finding it more profitable to add weight and make cattle larger; 1,500-lb. steers are becoming quite common. It’s costing feeders 86 cents to add a pound against a $185 fed market. Replacement feeders are still expensive and feedlots are full right now.
The Cattle on Feed report is also expected to show 8% fewer cattle placed in feedlots which might be expected after the large placements in February. January weather really slowed down cattle movement to and from feedlots.
The Cattle Report opined recently, “With the recent declines in feed prices, closeouts at the feedyard level will be dipping into red ink. Optimism for the future and short supplies have been perfect conditions for overpaying for feeder cattle and calves. Feedlots’ profits almost always deliver optimism accompanied with feelings of power and invincibility. Those feelings must be punished prior to a restoration of sanity in pricing. The past two months have produced indications of a slowdown in feedyard placements.
“The drought map for the United States is revealing. This spring there are few spots in the country suffering extreme drought and the map shows a profile ideal for restoring the nation’s breeding herd. Improving genetics and heavier outweights for fed cattle will fill in some of the shortages in the beef industry but more animals are necessary to regain beef proper market share of the meats.
“Market observers will begin to look for signs of a reduction in heifer placements on feed. This will signal the beginning of the herd rebuilding. Heifer retention also will reduce the calf pool available for grazing and growing. Conditions are now right for the rapid rebuilding of the nation’s cattle herd. The omission of a breakdown by sex in the monthly COF reports by USDA is an oversight in need of correction.”
However, it doesn’t appear that the cattle industry won’t get more data on cattle numbers but rather less after USDA’s National Ag Statistics Service announced they will not produce the midyear cattle inventory report and trim back other data reporting.
It’s a strange move since the cattle industry seems to want more reporting data, especially during times like these when most cattlemen want to know more about heifer retention and beef cow numbers. Another fine example of the government working for the people. Keep on praying for rain and the market will recover. — PETE CROW
