Cattle Rally Stalls Despite Tight Supplies
April typically finds increasing beef demand fueling a rally that reaches seasonal highs. The month began with optimism as both fed and feeder cattle prices moved North. But the spring rally stalled this week as cowboys and packers search for signs supporting ideas the market will conform to seasonal trends.
Cattle feeders began the week with ideas they could build on the previous week’s gains, asking $169 for ready cattle. Packers balked, and early week bids were $5 to $6 under the ask. Packers have slowed kill numbers to historic lows in an attempt to push wholesale prices higher.
While analysts agree that beef demand remains strong despite retail prices that are near historic highs, competitive meats are beginning to show a drag on the beef complex. Both pork and poultry production shows increases, and corresponding price declines at the retail level. Most notable is the monumental price shift in the pork industry.
Pork production, which recorded a 1.5% decline last year, is on pace to increase about 6.5% in 2015. That has produced a decline in negotiated hog prices exceeding 50%. Last year pork producers sold lean carcasses for $129 per cwt., but last week average prices were at $58.57. That price collapse puts pork in front of retail consumers at much cheaper levels and creates a price disadvantage for beef.
Beef packers bought some cattle early in the week at $164 to $166, and on a dressed basis at $263 to $265, which was $2 to $4 lower on both counts. Boxed beef prices Friday afternoon averaged $253.21 per cwt., up 78 cents per cwt. from the previous Friday.
The cautious tone of the market spilled over into feeder cattle as yearlings and calves sold unevenly steady to $3 higher in the week, but turning unevenly steady later in the week. USDA Market News reports some pressure on yearling heifers and heifer calves weighing 500 to 850 pounds through the North and South Central regions, in some cases selling $3 to $5 lower.
Slaughter cows and bulls sold unevenly steady. USDA's Cutter cow carcass cut-out value Friday afternoon was $231.50 per cwt. up 32 cents from last Friday.
