Fed Cattle
Last week’s market reached new all-time highs and asking prices will be higher this week.
Cash cattle trade was called light with prices rallying near, but not reaching, the $2 summit. USDA’s Cattle on Feed report found larger-than-expected May placements.
Cash prices in the North surged higher on active trade volumes while the South posted modest gains on light to moderate volume. Feeder cattle and calf prices were mixed.
Little change was found for livestock feeders last week as near identical week-to-week market prices held margins solidly in the black. Beef packers saw modest improvement with higher wholesale beef prices.
The outside trades of $186 in the South and $193 in the North are a telling sign that leverage is there for the cattle feeder. Given the chance to capitalize with multiple bidders the market should respond favorably.
Aside from the added carcass tonnage, the leap in carcass weights - driven by extra days on feed - has generated a noted shift in carcass marbling and quality grade achievement.
Increased steer and heifer carcass weights are offsetting decreased slaughter to result in a fractional increase in fed beef production for the year to date with significant increases in recent weeks.
Packers reluctant bidders as futures remain significantly discounted to cash. Feedyards content with standoff late in the week.
Beef is winning, and camera grading in packing plants is helping ensure the quality and consistency specific brands require is being met. That, in turn, is helping beef gain market share.
After briefly exceeding $400 per head, cattle feeding margins tumbled $75 last week, but the balance didn’t go to the packer as their losses increased. Pork margins held firm.
Cash prices leaked $1 lower but Friday evening trades suggest packers still scramble to meet their needs and are willing to add freight to do so.
Fed cattle trade lower for first time since mid-April; feeder cattle, wholesale beef prices continue push higher. Holiday beef clearance called good among strong demand.
The use of camera grading in America’s beef plants has improved the accuracy, precision and consistency of grading from plant to plant and from lot to lot of cattle, regardless of where they were harvested.
USDA’s Cattle on Feed report for May 1 found 11.554 million head on feed, down 1% and the first year-over-year decrease in feedlot inventories in eight months.
Cash cattle prices trade higher for a fifth consecutive week and on feed inventories continue to shrink seasonally. Cattle on feed numbers matched pre-report estimates.
A solid rally for cash fed cattle coupled with declining total feeding costs helped boost cattle feeding margins nearly $85 per head above the previous week. Pork margins now over $40 for the fourth consecutive week.
Shorter production and processing schedules have produced the desired effect for packers – a rally in wholesale beef markets. Feeders gain more marketing leverage.
Wholesale beef prices staged an impressive rally this week, leading the cash and futures markets higher. Packers’ marketing leverage remains elusive.
The race towards expansion of the cow herd isn’t likely to start in 2024. That holds some important implications as the industry shuffles around for supply in the years to come.
Livestock feeders find solid profits as the summer grilling season begins. Beef and pork packers continue to struggle with negative margins.
Higher asking prices meet resistance and feeders find security in cash/futures basis strength. A similar standoff pattern shapes up for this week.
As replacement heifer inventory increases the percentage of heifers in the fed slaughter mix declines. That decline in the recent cycle was especially sharp, dropping below 34% for three years.
Cattle feeders maintain a strong bargaining position despite a softer futures market. Feeder cattle and calves trade mostly lower.
When it comes to trade – especially for the beef industry - if you’re hearing a tariff siren, it’s likely a false alarm. Tariffs are a solution in search of a problem.
U.S. beef trade is a complex issue involving significant imports of lean trim and valuable exports of high-quality cuts. Without imported lean trimmings for the hamburger market, U.S. cow slaughter would need to double.
Harvest picks up and packers are now finding themselves trying to bridge the gap between yearlings and calves. Smaller showlists create a challenge for packers.
Cash markets found their footing following some positive news when HPAI testing of ground beef found no sign of the virus. Futures turned positive and cash cattle traded higher for the second consecutive week.
Beef carcass cutout values have continued a precipitous decline since mid-March, tracking a 5% lower trend in that period. That is firmly against the trend charted in the previous three-year average.
Cattle feeders and pork producers both saw higher cash prices for harvest-ready animals last week and margins improved accordingly. Packers continue to struggle with negative margins.
After a mostly sluggish April, market-ready fed cattle saw a solid rally in the North and steady money in the South. Futures markets began to look past the psychologically bearish H5N1 virus news.