Although boxed beef prices are at an all-time high, there is still a major disconnect from live cattle prices. Cash cattle have traded higher, but at lower volumes. On the feeder cattle side, corn, live cattle and boxed beef prices continue to hold pressure on the contracts.
Live cattle futures closed Thursday about a dollar higher from the Friday before. The June contract settled at $116.60 and the August contract at $119.87.
Cash trade volume was slow again last week, with live steers selling mostly between $118-121. Dressed steers sold between $188-193. A week earlier, the volume of cash trade was disappointing with only 68,950 head sold. Live steers averaged $119.72 and dressed steers averaged $190.52.
Although cash prices were higher compared to the week prior, “the packer seems to be window dressing, rather than seriously accumulating more physical inventory at this week’s higher price level,” remarked Cassie Fish of The Beef.
“Given the large number of committed cattle and the too slow slaughter pace, it is no surprise packers aren’t more aggressive. Add in the fact that cutout values are likely reaching the end of an incredible rally, and it seems obvious,” she said.
The Fed Cattle Exchange hosted their weekly sale Wednesday, listing 2,792 head. Of that, only 336 head sold. Reserve prices were listed mostly at $119-120 and high bids reached $117.50-119.75. Texas sold 167 head and Kansas sold the remaining 169 head.
The Cattle Report noted the buying patterns for the past three weeks have been similar: “Packers purchase a few cattle each day paying similar prices, attempting to work off the heaviest cattle from feedyards that have been unable to market cattle.” They also stated that packers are supporting the market to send a message not to liquidate the national herd.
Slaughter through Thursday totaled 472,000 head, about 9,000 head more than the same time the week earlier. The week earlier’s total slaughter is estimated to reach 640,000 head, comparable to the week prior. However, experts say this is still well under the necessary 670,000 head that should be processed weekly to meet summer demand. USDA actual slaughter data for the week ending May 8 was reported at 638,849 head.
Boxed beef prices have begun to level out at their seasonal high, although they continue to see small daily gains. The Choice cutout closed Thursday at $324.18 and the Select cutout at $301.61, a weekly gain of about $8 and $6, respectively.
In other futures news, CME announced in late April the price limit for corn would increase from 25 cents per bushel to 40 cents per bushel as of May 3. Similarly, starting June 1, the daily limit for live cattle futures will increase to $6.25/cwt from $5/cwt and the live cattle limit will increase to $5/cwt from $4/cwt.
Feeder cattle
Experts’ pre-report estimates for the Cattle on Feed report released after WLJ press time May 21 ranged from 103-105.7 percent for cattle on feed as of May 1. Placements were estimated to be anywhere from 117.7-139.7 percent of last year and marketings were projected to reach 131-136.4 percent.
Feeder cattle futures traded mixed most of the week, and closed Thursday with the May contract down $2 from the prior Friday to $135.75 and the August contract at $151.07, pennies less than the week prior. CME reported its latest Feeder Cattle Index up $2.85 from the prior Thursday to $133.86.
The latest Crop Progress report showed 80 percent of the expected corn crop had been planted through May 16, compared to the typical average of 68 percent. Corn futures made some slight gains throughout the week, but ultimately closed lower Thursday with the July contract at $6.64 and the September contract at $5.79.
“Calf prices are showing strength across the nation. Good moisture in many areas has increased the interest in light cattle that are in diminishing supply,” The Cattle Report said. “The cattle complex has been promising producers better prices in the future for a long time but the mirage disappears each new marketing period.”
Colorado: Winter Livestock in La Junta sold 279 head Tuesday. Feeder steers and heifers were lightly tested. A group of steers weighing 705 lbs. sold for $140.
Kansas: Winter Livestock in Dodge City sold 660 head Wednesday. There were not enough steers or heifers for a market test, however a lower trend was noted. A group of benchmark steers averaging 791 lbs. sold for $133.
Missouri: Joplin Regional Stockyards in Carthage sold 5,234 head Monday. Compared to the last sale, feeder steers sold steady to $3 higher and heifers sold steady to $2 higher. Benchmark steers averaging 733 lbs. sold between $135-145.
New Mexico: Roswell Livestock in Roswell sold 1,187 head Monday. Compared to the last auction, steer calves under 600 lbs. sold $6-12 higher and feeders over 600 lbs. were $6 higher. Heifer calves under 600 lbs. sold $3-4 higher, and there was no comparison on feeders over 600 lbs. due to limited offerings. A total of 19 head averaging 534 lbs. sold between $166-175.
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 7,834 head Monday. Compared to the previous sale, feeder steers sold steady to $2-4 lower and feeder heifers sold steady. Steer calves sold $4-5 lower and heifer calves sold steady. Benchmark steers averaging 772 lbs. sold between $129-143.25.
South Dakota: Sioux Falls Regional Cattle Auction in Worthing sold 2,811 head Monday. Compared to a week earlier, feeder steers sold $3-6 higher and heifers sold $2-3 higher with instances of $5 higher on 800-900 lbs. Benchmark steers averaging 783 lbs. sold between $139-146. — Anna Miller, WLJ managing editor
