Cattle futures cast a pall over markets this week, pressured by last week’s Cattle on Feed report indicating more aggressive feedlot placements than expected. The sharp decline and increased volatility in Lean Hog futures added pressure.
Not counting the expiring spot month or newly minted away Mar, Feeder Cattle futures closed an average of $2.55 lower week this last Friday (47 cents lower to $5.27 lower).
Even so, cash steers and heifers sold steady to $5 per cwt higher, according to the Agricultural Marketing Service (AMS).
“Feeder cattle markets have generally followed seasonal patterns with calves moving higher since January. Though calf prices typically peak in early April, delayed grass demand may extend the seasonal strength deeper into April,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. Peel adds that feeder-weight cattle (700 pounds and heavier) should begin rising toward a peak in late summer.
“There does appear to be some optimism in the feeder cattle market as the August feeder cattle futures price is trading at an $11 premium to the April contract,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The educated guess at this point is that the cash price of feeder cattle will begin a strong advancement to the upside in the coming months to fall more in line with what is expected for live cattle.”
Impacts from the recent bomb cyclone and subsequent prolonged flooding downstream surely will play a role.
Calf losses this spring will not really become apparent until fall and may possibly be big enough to affect the overall 2019 calf crop says Peel. Besides weather-depressed carcass weights and less beef production than originally anticipated, he added that recent floods most assuredly increased cattle morbidity and mortality.
“On the crop side, losses of stored grain, hay and other products will have immediate impacts on the producers affected and perhaps on broader markets. Disruptions to transportation may be the biggest impact with truck, rail and river transportation all impacted by the floods and associated damage, and likely to be affected for weeks ahead,” Peel noted.
Jim Robb, senior analyst with the Livestock Marketing Information Center (LMIC) cautions that protracted flooding could increase feed costs and pressure calf and yearling prices.
Don Close, senior protein analyst at Rabobank AgriFinance, expects to see a seasonal rally in Feeder Cattle futures from the Mar-May low to a high in Aug-Sep.
Negotiated cash fed cattle prices were $2-$3 per cwt lower in the Southern Plains at $125-$126 per cwt. on a live basis. Prices in the Northern Plains were mostly $3 lower at mostly $126. Prices in the western Corn Belt were $2 lower at $127-$129. Dressed sales were mostly $2-$3 lower at $206 in Nebraska and $205 in the western Corn Belt.
Week to week on Friday, except for 45 cents higher in the back contract, Live Cattle futures closed an average of $3.08 lower (75 cents to $4.50 lower).
Best bet, depending on how bullish you are, lost tonnage could still push cash fed cattle prices higher.
Listen to Wes Ishmael's Cattle Market Weekly Audio Report every Saturday morning on the BEEF magazine website. This is your report for Saturday, March 30, 2019.