Cash cattle prices this week appear to be at a crossroads. Prices have a strong seasonal tendency to fade from early April into late July, but price gains the last two weeks put this trend in jeopardy.
If prices gain again this week, it’s possible the seasonal trend could be put off or even be routed all together.
Cattle sellers likely will push for higher prices this week, but they may find they have feet of clay in their quest to mitigate steep losses on cattle going to slaughter. No bids or offers were reported in the Plains cattle markets Monday, but asking prices were expected to surface this week around $163 to $164 per cwt on a live basis and $262 to $264 dressed.
Live cattle futures Monday ignored sharply higher wholesale beef prices and settled lower as estimated showlists indicated more cattle for sale to packer buyers this week in all major cattle-feeding states.
The market opened higher, and for much of the session traded higher, after cash cattle prices last week tacked on another $1 per cwt to trade at mostly $161 on a live basis and $256 to $257 on a dressed basis.
The gains in fed cattle prices last week came after higher boxed beef prices encouraged sellers to dig in and hold out for higher prices. However, this week’s estimated feedlot showlists in all major feeding areas were up, weakening sellers’ negotiating positions.
The higher showlists also gave some confirmation to calculations from previous USDA Cattle-on-Feed reports that said the number of cattle placed on feed was up and that slaughter numbers should increase.
SEASONALS DRAGGING ON CATTLE
In addition to the showlists, the seasonal tendency for slaughter steer prices in the Southern Plains is to decline through July as a Livestock Marketing Information Center graph shows.
Last year, prices declined only into mid-June as tight supplies forced buyers to step up and pay more for the cattle earlier in the summer than usual to meet product bookings.
But at the time, packers were seeing strong domestic and export demand for the meat and the hides and offal.
This year, hide and offal prices are below last year and headed lower, approaching the previous five-year average, and beef prices have only recently been low enough to pull estimated packer margins into the black.
Fed cattle supplies are expected to be adequate to ample well into the summer after placements of young cattle for fattening in previous months exceeded expectations. These placements also tended to be heavier, leading to heavier cattle at slaughter and more per-animal beef production.
CASH CATTLE QUIET
Cash cattle markets Monday were quiet with no bids or offers reported.
Slaughter was even with a week earlier at 113,000 head but were only slightly behind last year’s 115,000 head. Slaughter this week was expected to reach 567,750 head, compared with last week’s 567,000.
Beef prices Monday were higher again, with the USDA reporting its choice cutout at $259.57 per cwt, up $1.45, and the select cutout at $248.10, up $1.28.
The CME Feeder Cattle Index for the seven days ended Friday was $219.26 per cwt, up $4.45. The premium to futures likely is adding strength to the May contract.