Last week beef packers did a good job processing 680,000 head. This is a remarkable number of cattle processed after the COVID-19 initial episode. It must have taken huge sums to satisfy workers and ensure their safety.
I can’t imagine how those meat processors were able to get folks back into what was considered a COVID hot spot. Be grateful that they are or can get 680,000 head through the system. Packers seem to know they must clear the backlog of cattle and get all that meat sold.
The industry is 400 million pounds behind last year’s meat production, or 3.5 percent behind, which doesn’t seem like much. But we’re still a million head behind last year’s slaughter level, or 6 percent behind.
It’s amazing how much that extra 51pounds of carcass weight delivers to the beef complex. My cowboy math says there’s about a half a million head represented in that 400 million pounds of beef. Do we just keep making them bigger and run fewer cows?
Boxed beef prices have stabilized for now at around that $208 mark for Choice beef. Last week the industry produced 9.7 percent Prime, 73.3 percent Choice, and 13.8 percent Select; there is plenty of quality grain-fed beef on the market. T
he challenge ahead is getting through July and August. If packers can keep up the 680,000-head pace, there will be more than enough beef to go around, at some price. Some analysts say we need 700,000-head slaughter levels to clear the pipeline.
It’s going to be a long, hot 60 days for cattle feeders and processors. Seasonally, this is when a lot of cattle are harvested but this is getting crazy. Last week, the Cattle Report said, “Consumers were shopping for fare for the Fourth of July and for many the alternative proteins were not in the basket.
Beyond Meat stock fell 10 percent in trading Monday as cheaper real beef prices attracted buyers who were shying away from the alternative offerings. When the chips were down, most consumers are choosing to stick with the tried and true beef products.”
Live cash trade last week was between $93 and $97 on light trade. It appeared that packers were accepting more formula and contract cattle, like 48,000 head last Monday.
I’m pretty sure that packer margins have disappeared, and packers have all the incentive and leverage to drive fed cattle prices south. After they supported the market at the beginning of this mess, it proved to me that packers do have a bit of a heart.
So, what’s this going to do to the feeder calf market? According to the Cattle Report’s breakeven charts, cattle feeders are losing $296 a head and 750-lb. feeder steers placed today have a negative $73 per head. Their best chance of making a buck is cheaper feed, which might be tougher since the last crop report showed corn acres down from last year.
The big video sales are in full gear and Superior’s five-day Weekend in the Rockies sale, held in Fort Worth, TX, is this week, along with Cattle Country Video in Cheyenne, and Western Video’s biggest sale of the year, which will be in Reno. A lot of calves and yearling will be priced for fall delivery.
Today, Thursday, July 1, Cow Country Video started the day selling yearlings from the Western Plain’s Rocky Mountain region. The heavy yearlings are selling well but are mostly at the $130 mark on yearlings without any special attributes. The cattle with special conditions—“program cattle”—have all been selling between $15-25 higher. If you can get your cattle in a program it’s worth doing but you have to do it now.
Cattle feeders also have a bit of leverage on calf and yearling prices, and let’s be thankful that there is great competition in the calf and yearling markets. Most of the yearling steers on Cow Country Video weighing over 900 lbs. have been selling for $125-135. These cattle would be ready to harvest in December or January.
Currently, the live cattle futures for December is $103.97 and for February it is $107.77—not necessarily a safe, coverable bet. March and May placements were lower than normal, which should create a hole in the fed supply starting in November. If we can work through that extra million head of fed cattle and lighten them up, we might see a stronger market by the end of the fourth quarter this year. — PETE CROW
