Cash market for fed cattle drops $5-6 as market adjusts to its present reality.

Ed Czerwien, Market Reporter

August 20, 2019

Both the cash and futures markets reacted predictably the week ending August 17 to the fire that shut Tyson’s Finney County, Kan., beef plant. The feedlot cattle trades were $5-6 per cwt lower and cash sales numbers dropped in volume. But other packing plants stepped up, used big numbers of other types of sales and running two Saturday shifts.

In fact, harvest numbers were significantly higher for the week. With packers enjoying ample profits, there is plenty of incentive for them to continue to run as hard and fast as they can, which will pick up the slack from the Finney County fire. 

Looking at volume, the Five Area formula sales volume totaled 276,180 head, compared with about 263,000 the previous week. The Five Area total cash steer and heifer volume was 44,912 head, compared with about 60,000 head the previous week. 

Nationally reported forward contract cattle harvest was about 60,000 head this week. The packers have 226,000 head for August and 243,000 head lined up for September. Cash sales this week included only about 4,322 head of 15- to 30-day delivery. But also had 48,000 head from the previous two week which no doubt are being used. 

Now looking at prices, the Five Area weekly weighted average cash steer price for the week ending August 17 was $106.68 per cwt, which was $5.69 lower than the week prior.     

The weighted average cash dressed steer price was $170.95, $11.28 lower. The Five-Area weighted average formula price was $180.75, which was $1.64 lower.  

The estimated weekly total federally inspected cattle harvest was 651,000 head, 9,000 higher than last week even though the Tyson plant was shut down. That compares with 659,000 head the same week last year.   

The latest average national steer carcass weight for the week ending August 3 was 872 pounds, 3 pounds higher than the previous week and creeping up on weights a year ago, which came in at 880 pounds.

This is the time of year when carcass weights really increase—last year’s weight was 8 pounds higher than the previous week. This year, feedyards are current and cattle are greener going to town, so it will be interesting to watch what carcass weights do.

The Choice-Select spread was $25.43 on the week, compared with $22.56 the previous week and a $10.46 spread last year. The spread is reflecting the greener cattle, fewer of which are grading Choice, and definitely helped again by much higher Choice rib and loin primal prices this year than last year. Both primals were around $50 higher than last year as retailers scramble to have enough steaks on hand for Labor Day.

 

About the Author(s)

Ed Czerwien

Market Reporter

Ed Czerwien is a market analyst in Amarillo, Texas. From the heart of Cattle Feeding Country, Ed follows the cattle and wholesale markets to keep beef producers up-to-date on the market moves that affect them. He previously worked with USDA as a Market News reporter. Ed is now semi-retired and continues to work with cattle trade analysis.

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