March 9, 2019
“Steers and heifers sold steady to $5 per cwt higher, with gains seen in calves suitable for grazing, as well as cattle suitable for direct feedlot placement,” said analysts with the Agricultural Marketing Service (AMS) on Friday.
“Where feeder cattle come from did make a difference on flesh condition this week. If an area has been inundated with winter moisture and harsher than normal temperatures, cattle have hardened up and are in lighter flesh than their counterparts from drier environments.”
Although auction receipts increased this week, extreme cold and winter conditions continued to hamper cattle movement in some regions.
“Very tough winter weather continues to plague the area with more snow and wind predicted for the weekend,” explained the AMS reporter at Hub City Livestock Auction in Aberdeen, S.D. “Yards and pens are already full of snow and many producers are starting to calve. Feed supplies are rapidly decreasing as cattle need so much more feed to keep body condition in the frigid weather.”
Week to week on Friday, Feeder Cattle futures closed an average of $1.71 higher (92 cents higher in the back contract to $2.70 higher in spot Mar). That was thanks to a surge of about $2.50 in the last two sessions.
Fed cattle prices hold steady
Negotiated cash fed cattle trade through Friday afternoon was generally steady at $128 per cwt on a live basis in the Southern Plains and Nebraska. Dressed trade was also steady at $205.
“The seasonal trend in the cash market would tend to say there is still upside in the finished cattle market, and there may be a few dollars left. However, the wind appears to have been taken out of the sails the past couple of weeks with cash prices failing to push closer to $130,” according to Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.
Week to week on Friday, Live Cattle futures closed an average of 52 cents higher (17 cents higher in the back contract to 90 cents higher).
Some might consider steady cash a disappointment, given increasing wholesale beef values and the tonnage that winter weather continues to take from the market.
Choice wholesale beef value was $4.84 higher week to week on Friday at $226.13 per cwt. Select was $1.99 higher at $218.78.
As for weights and weather, for the week ending Feb. 23, the average dressed steer weight was 5 pounds less than the previous week and 9 pounds less than a year earlier at 874 pounds, according to the Actual Slaughter Under Federal Inspection report from USDA. The dressed heifer weight was 1 pound less than the previous week and 10 pounds lighter than the previous year at 818 pounds.
Beef production will still be higher
Projected beef production for this year is 27.30 billion pounds, according to the March World Agricultural Supply and Demand Estimates (WASDE). That’s 310 million pounds less (-1.12%) than the previous month’s projection.
“Beef production is reduced from the previous month on the pace of fed cattle slaughter in the first quarter and lower expected marketings in mid-2019,” say analysts with USDA’s Economic Research Service (ERS). “Partly offsetting the lower fed cattle slaughter is higher expected cow slaughter. The lower production forecast also reflects lighter carcass weights in 2019.”
Keep in mind, lower estimated beef production for this year still represents 432 million pounds more beef than last year’s estimated production.
For a narrower example, consider January cattle slaughter and beef production.
The average steer dressed weight in January was 886 pounds, which was 7 pounds lighter than a year earlier, according to the monthly USDA Livestock Slaughter report. The average dressed heifer weight was 12 pounds lighter at 824 pounds.
Fed steer and heifer slaughter under federal inspection of 2.19 million head was 61,200 head more (+2.87%) than the previous year.
Total beef production in January of 2.31 billion pounds was 30.8 million pounds more than the previous year (+1.35%).
Based on current price strength and expectations for firm demand, ERS increased the price range for fed steers (Five Area Direct) $1 at each end of the range to $116-$123 per cwt. Price projections are $124-$127 for the first quarter; $121-$127 for the second quarter; $110-$120 for the third; $109-$119 for the fourth quarter.
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