Cattle Market Reports and Analysis
Based on cash sales of $108.77, cattle closeouts lost an average of $90 per head the week ending March 15.
Sharply higher beef cutout values produced windfall profits for beef packers last week while cattle feeders saw closeouts with average losses about steady, according to the Sterling Beef Profit Tracker.
Average feedyard closeouts saw modest profits for cattle last week as cash prices improved. Hog finishing margins declined from near breakeven to a loss of $6 per head.
Cattle and hog feeding both saw solid average profits for the week ending April 2, boosted by higher average farmgate prices. Cattle were positive for the second week, while positive hog margins entered a third month.
Profit margins for cattle and hogs continue trending in opposite directions as feedyard closeouts slipped below breakeven and hog margins saw another boost from higher prices.
Market hogs sold last week earned an average profit margins nearly four times that of fed steers. That’s mainly due to a rally that has added more than $20 per cwt. to lean hog carcass prices over the past month.
Cattle and hog finishing margins were headed in opposite directions last week, with lean hog prices enjoying a three-week rally while cattle prices were stuck in neutral for a second week.
Cash prices for both cattle and hogs advanced last week leaving feeding margins for both species solidly in the black. Hog margins were positive for the eighth consecutive week and cattle climbed out of the red.
Cattle feeding margins improved $60 per head the week ending Feb. 12 and hog margins reported profits for the second consecutive week as lean hog prices rallied.
Average feed costs for finishing cattle and hogs are 25% to 28% higher than the same week last year, according to Sterling Marketing’s weekly calculations.
The average cost of feeding a steer to finish weight was 25% higher for cattle marketed last week and is projected to be 31% higher for cattle placed on feed last week at roughly $600 per head.
Cattle feeders are finding modest profits on market-ready cattle early in the New Year, but replacement feeder cattle prices are driving projected breakevens to eight-year highs.
Spiking wholesale beef prices the week before Christmas helped lift packer margins into the black while increasing cattle feeding margins.
Average cattle feeding margins increased last week as negotiated cash prices set new record highs.
Wholesale beef prices continue to support packer margins even as negotiated cash cattle trade well-above the five-year average. Pork producers enjoy a market rally that has lifted margins out of the red.
Feeder cattle got a boost from declining corn prices and wholesale beef prices moved lower ahead of next week’s holiday-shortened schedule.
Many similarities exist between today’s cattle market and that of a decade ago. But this year’s market is not, as Yogi Berra once said, “déjà vu all over again.”
The current high cattle prices were not a matter of “if” but “when,” following severe drought across cattle country. However, in volatile markets, should cow-calf producers be optimistic about profits in 2023?
Beef packers appeared unprepared for the rapidly tightening supply of market-ready cattle and the result was a rocket to new cash highs.
Packers were aggressive bidders in all regions as cash fed cattle markets made historic late-season moves higher in the holiday-shortened trading week.
Increasingly tight cattle supplies suggest that margins at all levels above the cow-calf sector will be squeezed in the coming months. The severity of the squeeze and the timing will vary across beef industry segments.
Wholesale beef prices hit a recent low the end of March at $280.51 per cwt., but the steady march higher since then put Friday’s close as the highest Choice cutout value for that week on data available back to 2004.
It does not appear that consumer beef buying behavior has changed significantly thus far with higher retail beef prices.
Passing on bids at record levels was common early last week and negotiated sales printed new record highs for the third week in a row. Analysts and cowboys are eyeing additional gains next week.
Given growing expectations that drought conditions will moderate through the coming months, bred cow and heifer values are likely to increase sharply by this fall.
Over the past four weeks beef production has averaged 6.4% lower than last year. Production is expected to drop more sharply the remainder of the year.
Instability in equity markets proved a drag on futures last week, providing an incentive for feeders to trade on lower bids. Packers will continue to struggle with inventory going forward.
The positive basis created by weaker futures prices enticed hedged feeders to accept lower bids early in week. Friday’s cattle on feed report further confirms a shrinking supply and will lend price support.
Cash fed cattle traded at steady money in all areas after futures markets moved lower Friday. Feeder cattle and calves posted significant weekly gains.
Carrying show lists the previous week paid off to the tune of $3 cwt. A combination of bullish factors fueled the market and cattle feeders were awarded.