Cash cattle and beef markets are in the throes of the summer doldrums, leaving the markets looking for direction.
Oklahoma State University Agricultural Economist Derrell Peel, said in a letter to Extension Agents called Cow/Calf Corner, that there were plenty of things to influence the cattle and beef markets currently.
Peel said late last week he was in central Nebraska on the eastern side of the Sand Hills where excess water continues to be an issue with continued flooding and roads washed out. Bottomland hay fields there are too wet for haying or grazing.
In other Nebraska regions, haying was delayed, and producers were struggling to harvest high quality hay, although lots of hay production was underway.
Fed and feeder cattle cash markets jumped sharply last week, led by higher futures prices. This, after several weeks of pressure and a somewhat overdone futures correction.
TRADE ISSUES ADD UNCERTAINTY
Uncertainty continues to plague cattle markets with broader trade and political uncertainty augmented by unknown and evolving feed market conditions.
Corn likely will be higher on a smaller crop this year but exactly how much higher and smaller remains an unknown as acreage and yield are uncertain.
Heavy feeder cattle prices abandoned the seasonal pattern in early May and are moving lower. However, these markets may be about to pick up some of the seasonal steam in the next month as heavy feeders typically peak in late summer.
Fed cattle prices typically move to a seasonal low in late summer. Last week’s jump in cash fed cattle prices could represent a summer low but there are still several weeks of summer before a low can be assured.
BEEF PRICES STRUGGLE SEASONALLY
Boxed beef cutout values had an early spring peak and have dropped seasonally since. Current Choice boxed beef values still are under pressure but are above last year.
However, select wholesale beef prices are weaker resulting in a choice/select spread that is moving higher counter-seasonally.
Choice beef primals mostly have gained recently and are generally higher than last year, except for loins, which are slightly lower. Choice beef brisket continues the juggernaut of recent years running 13% higher year-over-year since mid-April but select briskets weakened sharply in the past three weeks, running 12% lower.
Beef markets are trying to sort out a number domestic and international market issues. The latest beef trade data was better with May exports about equal to last year although imports continue to grow.
However, domestic beef markets are struggling under relatively poor summer grilling weather and beleaguered macroeconomic conditions.
Ample supplies of meat are weighing on the market as well. In particular, large pork supplies and the failure of anticipated Chinese demand to materialize is pressuring wholesale values, adding to beef’s wholesale price pressure.
CATTLE, BEEF RECAP
Cash cattle traded in the Plains last week at mostly $111 to $112 per cwt on a live basis with some in Nebraska at $114 to $115. Dressed-basis trading was reported at mostly $182 to $183 per cwt with some early up to $185.
The USDA choice cutout Tuesday was down $0.34 per cwt at $212.93, while select was off $0.05 at $189.16. The choice/select spread narrowed to $23.77 from $24.06 with 109 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $141.16 per cwt, up $0.70 from the previous day. This compares with Tuesday’s Aug contract settlement of $141.05, down $0.05.
The estimated corn basis for feedlot hedgers in southwestern Kansas would be about $0.15 to $0.20 a bushel over the Sep futures price.