Weather-Beef Markets Weigh On Auction Demand

Part of last week’s auction doldrums also could be explained by heavy, widespread rains that curtailed receipts and demand in some areas. Arguably, however, most of it revolved around the lack of demand spark.

Wes Ishmael

March 24, 2012

4 Min Read
Weather-Beef Markets Weigh On Auction Demand

Stocker and feeder cattle traded unevenly steady to $2 lower last week, with instances of as much as $5 lower, according to the Agricultural Marketing Services (AMS).

“Several factors are contributing to the lower trend, with pressure continuing in the cattle futures market as well as cash fat cattle trade, along with concerns of strong beef demand (home and abroad) holding current market share amid China’s economic condition.” That’s how the market reporter at Ozarks Regional Stock Yards in West Plains, MO, summed up on Tuesday the market pressure that began unwinding in auction barns early on.

That AMS reporter also pointed out the majority of grass cattle are purchased already, while the availability of old-crop and stocker-type calves is dwindling. He added, “It’s also being said that early spring-like temperatures have switched the priorities of Northern corn farmers from livestock to grain as they have planters greased, hooked up and big tractors idling patiently at field’s edge awaiting the green flag for this year’s planting season. (more below).”

Part of last week’s auction doldrums also could be explained by heavy, widespread rains that curtailed receipts and demand in some areas. Arguably, however, most of it revolved around the lack of demand spark.

Choice boxed beef cutout values were $2.50/cwt. lower Friday week-to-week at $187.41/cwt. Those values are $10.66/cwt. lower than the first Friday in March. Select boxed beef cutout values were $1.60/cwt. lower Friday week-to-week and were down $7.23/cwt. compared to March 2.

Despite that, cash fed cattle sold mostly steady to $2 higher last week at $126-$128 on a live basis and $202-$204 in the beef.

The extraordinarily mild winter also continues pressuring the beef market by way of unseasonably heavy carcass weights.

“…Steer weights are currently running at around 850 lbs. per carcass, compared to 829 lbs. per carcass a year ago and 828 lbs. for the five-year average,” said Steve Meyer and Len Steiner in Monday’s CME Group Daily Livestock Report. “Overall cattle carcass weights (this includes steers, heifers and cows) were last quoted at 791 lbs. per carcass, about 18 lbs. per carcass heavier than last year. The increase in weights has added about 11.1 million lbs. of beef into the supply chain, or the equivalent of almost 20,000 more head of cattle coming to market.

Steiner and Meyer add, “…In addition to bringing to market heavier cattle, slaughter in the last three weeks also appears to have increased, further adding to the supply of beef coming to market, pressuring prices lower…”

Exports continue offering a positive counter-force. Net beef export sales for the week of March 15 (most recent available) were off the charts at 52,000 metric tons, the most in a decade or so. Asking around, there’s not much an explanation and plenty of caution about drawing any conclusions from a single-week snapshot, especially in a marketing year that has been defined by atypically large increases and decreases week-to-week. Overall, though, beef export sales are at least keeping up with last year’s historic pace.

Friday’s USDA Cattle on Feed report (COF) reported the March 1 cattle inventory at 11.7 million head, 3% more than the previous year and at the upper end of pre-release estimates (the average estimate was 102.3%).

Placements in February were 1.71 million head, also 3% more than the previous year, in line with the average estimate of 102.7% heading into the report.

Marketings in February were 1.76 million head, 2% less than the previous year. That's more bullish that the average pre-release estimate than pegged marketings at only 0.5% less.

“The mild winter and the record calf prices pulled many feeders to market earlier than normal (nationwide auction receipts are running 2.4% heavier than last year, but 3.4% lighter than the five-year average), which explains why February placements remained relatively high,  even though total calf headcounts are lower,” AMS analysts said Friday.

“Most cattle marketers expect offerings to become extremely tight through the spring months with most light cattle turned out and very few yearling feeder cattle left to sell,” AMS analysts say. “One of these months, the Cattle on Feed report will reflect just how short supplies really are; that could bring a newfound spark to the industry after most of the bulls have left the room.” 

Subscribe to Our Newsletters
BEEF Magazine is the source for beef production, management and market news.

You May Also Like