The cash market for fed cattle is, in many respects, much like the weather. Even those who have all the technology and tools and experience they can amass sometimes get their predictions wrong. And, like the weather, if you don’t like it, just be patient. It will change.
That certainly was the case for the fed cattle market for the week ending May 19. But up until now, cattle feeders very likely were happy with how the market has performed so far this year.
And while everyone knew that cash prices would turn south, the magnitude of the drop took many market watchers by surprise.
Looking first at the volume of cattle traded, the Five Area formula sales volume totaled 230,545 head, compared with about 216,462 the previous week. The Five Area total cash steer and heifer volume was 96,657 head, compared with about 119,383 head the previous week.
The national cash sales for the week include about 51,496 head of 15 to 30-day delivery along with 40,000 head the previous week. This week, almost half of the national cash sales were 15 to 30-day delivery.
The estimated weekly total federally inspected cattle harvest was 660,000 head, compared with 612,000 head the same week last year. The current year-to-date total is about 334,000 head higher than last year and 965,000 head higher than the same period in 2016.
So we’ve had two years of big volume increases in total cattle harvest. We’re half way through the year and we’re running just short of a million head above 2016.
Nationally reported forward contract cattle harvest was about 44,000 head, compared with about 41,000 head the previous week. The packers have about 202,000 head of forward contracts for May along with about 220,000 head for June.
Now looking at the prices, the weekly weighted average cash steer price for the Five Area region was $114.73 per cwt, compared with $121.65 the previous week, down $6.92. The weighted average cash dressed steer price for the Five Area region was $184.02, compared with $191.99 the previous week, a drop of $7.97. These very big drops in cash prices no doubt impacted some by the 15 to 30-day delivery prices.
The Five Area weighted average formula price was $198.83 per cwt, compared with $198.95 the previous week, showing that formula sales follow cash sale trends more slowly.
The latest average national steer carcass weight for week ending May 5 was 849 pounds, 1 pound lower than the previous week but still quite a bit higher than the 832 pounds recorded the same week last year. Weights a year ago dropped 15 pounds and were the low weights for the year.
The Choice-Select spread was $23.79 on Friday, compared with $22.28 the previous week and a $25.72 spread a year ago. Last year this spread jumped to $30 in June so we will watch it closely.