A Beef magazine article Tuesday wondered if the cash fed cattle market hadn’t hit a seasonal bottom, stemming the flow of cash from feedlot pockets. The answer from a historical perspective is a strong maybe.
The Livestock Marketing Information Center in Denver, CO, keeps tabs on weekly slaughter steer prices in the Southern Plains. According to its charts of cash prices, the annual low should be happening any time in the next two to three weeks.
The data showed that last week’s average fed steer price in that region of the country was $99.48 per cwt, down from $99.06 the week before. Historical data show that last year’s annual low took place the last week of August at $106.92 per cwt.
But that was early. The 2013-2017 average annual low came the last week of September at $123.11 per cwt.
From the annual low, fed steer prices in the Southern Plains work higher until the first week of November where price direction becomes muddy until December when retail grocers and restaurants begin placing orders for early January delivery.
Other holiday meats and expenses also compete for consumer attention at that time of year.
MUDDYING THE WATERS
There are several things the market must deal with over the next few months; some are seasonal issues and others are unique to this year.
The most obvious issue is the Tyson beef plant at Holcomb, KS, which was put out of commission by a major fire on Aug. 9. Tyson has since said the facility may resume operations on or around the end of the year.
Fed cattle prices dropped in the country immediately after the fire, but total US slaughter has hardly changed in the weeks following the blaze. Other Tyson plants and beef plants of other companies have added Saturday shifts to pick up the slack.
However, for feedlots in the immediate vicinity of the Holcomb plant, increased transportation costs have added to their cost of doing business.
But the big question for the feeding industry and cattle investors has been whether the rest of the industry will be able to continue filling in for the idled Tyson plant. Feedlot marketings may be current, but total supplies are large and any other hiccup in processing capacity could overtax the industry’s ability to cope.
Retail beef buying interest often struggles in October. Retail grocers often feature more pork products this month as hog slaughter begins to ramp up seasonally and shoppers are looking forward to spending more for the Christmas season. Grocers also are looking to tune up shoppers’ palates for the Thanksgiving turkeys, hams and fixings so they feature more of the lower-priced pork in their advertisements. And, since a large percentage of shoppers only buy featured items, pork gets a little more play.
CATTLE, BEEF RECAP
Limited cash cattle trade was reported in the Corn Belt Tuesday at $101 to $102 per cwt, up $1 from last week.
Cash cattle trade last week ranged mostly from $99 to $100 per cwt on a live basis with some at $101 late in Nebraska, down $1 to $2 from the previous week, and at $159 to $162 on a dressed basis, down $1 to $5.
The USDA choice cutout Tuesday was down $0.85 per cwt at $219.77, while select was down $2.66 at $193.91. The choice/select spread widened to $25.86 from $24.05 with 116 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $137.12 per cwt, up $1.03 from the previous day. This compares with Tuesday’s Sep contract settlement of $139.17, up $2.62.