As the cattle market enters the dog days of summer while still trying to claw its way out of the disaster caused by COVID-19, market dynamics are beginning to return to a more fundamental and predictable level.
The cutout is now back almost to pre-COVID-19 levels. Expect the cutout to continue to fall as we head deeper into summertime. That’s because of the abundant amount of protein that will be available in the third quarter and the potential for consumers to be cautious buyers as the recession affects demand.
As the cutout falls, fed cattle prices will likely remain under pressure, the dynamic we’ve seen the past few weeks. As cattle feeders and packers work through the huge backlog of heavyweight, long-fed cattle, beef production in the third quarter is expected to be 6% higher than last year. Where will wholesale beef and cattle need to be priced to encourage consumers to keep eating beef? That’s the question on everyone’s mind right now.
Looking first at volume, the Five Area formula sales volume for the week ending June 20 totaled 234,428 head, compared with about 238,000 the previous week. The Five Area total cash steer and heifer volume was 96,981 head, compared with about 82,000 head the previous week.
Nationally reported forward contract cattle harvest was about 35,000 head for the week. Nationally reported 15- to 30-day delivery was 14,198 head along with 9,938 head the previous week.
Now looking at prices, the Five Area weekly weighted average cash steer price for the week ending June 20 $100.78 per cwt, which was $3.69 lower compared with the previous week. The same week last year, it was $110.48, which was about $3 lower than the week prior. However, the current Five Area weighted average live formula price was $111.73 for the week.
The weighted average cash dressed steer price was 160.70 per cwt, which was $5.70 lower. The Five Area weighted average formula price was $176.76, which was $9.02 lower.
The estimated weekly total federally inspected cattle harvest for the week ending June 20 was 656,000 head, which compares with 668,000 head the same week last year. So we’re still getting very close to last year finally since the plants are using many medical safety items.
The latest average national steer carcass weight for the week ending June 6 was 892 pounds, 1 pound higher than the previous week and 46 pounds above the 846 pounds the same week last year. Weights this week last year were 4 pounds higher compared with the previous week.
The Choice-Select spread was $9.81 on Friday, June 20, compared with $11.37 the previous week and a $20.27 spread last year.