Cash Cattle Rallies Ahead of COF Jump
Cash fed cattle proved surprisingly strong this week, with the Monday-Thursday average for the five direct-market areas reaching $143.00 even, slightly below the $143.22 peak reached in the last week of February. Packers were eager for the higher-grading kind in the North, with prices at $143 to $147 per cwt., and $230 to $234 dressed, $2 to $5 higher. Cattle in the South saw active trading at $140 per cwt., $1 higher.
What was even more surprising about the cash strength was the packing industry’s strong preference for delaying cash trading during weeks ahead of USDA’s Cattle on Feed Report, according to Pro Farmer analysts. This week’s higher bids suggested packers need animals, indicating cash trading may extend strength over coming weeks, although cash trading in the last week of most months tends to be weak. Also, this week’s decline in beef cutout, with Choice cutout slipping $2.26 to $267.91 per cwt. at the close on Friday wasn’t encouraging.
June live cattle fell $1.475 to $138.425, up $2.00 for the week. May feeder futures settled 97.5 cents lower at $163.875, a weekly gain of $2.10.
USDA’s Cattle on Feed Report looks bearish for Monday’s futures opening, since the March placement total, at 1.990 million head, essentially matched the year-ago figure. A 7.8% annual decline was expected. When combined with the marketings figure at 2.000 million (down 2.0% year-over-year), those shifts put the April 1 U.S. large-lot feedlot population at 12.105 million head, up 1.7% from the comparable 2021 figure when a flat reading was projected by industry analysts.
Cash strength over the past two weeks sets the stage for possible follow-through strength in early May. Such gains are rather rare, Pro Farmer says, since cattle slaughter routinely increases substantially through the April-May period, thereby triggering a seasonal price downturn before May 1 of most years. This week’s preliminary slaughter total, stated at 665,000 head by the USDA on Friday, matched the year-ago figure, but doesn’t necessarily mean feedlot supplies are getting more current. Still, such cash strength this year, despite seasonally rising cattle/beef production, suggests robust export demand may be offsetting domestic demand weakness caused by inflated retail beef prices.
