Cattle feeders probably would be OK with fed cattle prices where they are if corn prices would soften somewhat, said Andrew Griffith, University of Tennessee livestock economist, in a newsletter called Tennessee Market Highlights.
Fed cattle prices have been unusually steady lately, trading in a narrow range for about five weeks, disappointing cattle feeders who feel cheated out of part of the estimated profits for beef packers. This is especially true considering the high cost of corn.
Fed cattle are trading about steady with last week at mostly $120 per cwt on a live basis and mostly $190 on a dressed basis.
According to the Sterling Marketing Beef Profit Tracker for last week, which was supplied by John Nalivka, owner of Sterling Marketing, unhedged feedlot margins may have been near $111.81 per head. This was up from $66.26 a week earlier, up from $87.00 a month earlier and up from a loss of $43.75 a year earlier.
In his calculations, Nalivka used a feed cost of $361.15 a head, compared with $359.16 for fed cattle sold a week earlier, $352.53 for cattle marketed to packers a month earlier and $303.14 for those sold for slaughter a year earlier.
But there is one good thing for feeders about the current beef and cattle markets, Griffith said, and that is that the cattle and beef markets remain firm as the calendar gets into June and hot weather.
BEEF MARKETS UNUSALLY STRONG
It’s no secret that strong beef markets are propping up the fed cattle market currently, a market analyst said. And, it usually is showing signs of the impending summer doldrums by now.
Data from the USDA’s Agricultural Marketing Service and compiled by the Livestock Marketing Information Center in Denver shows a seasonal peak in negotiated, spot market choice boxed beef prices about the third week of May. This downtrend usually continues until the last week of July.
From the summer low, choice boxed beef prices make a tepid recovery in August as buyers plug inventory holes for the Labor Day holiday. This is followed by another decline into the first week of October before the fall rally for the end-of-year holidays.
Last year’s springtime boxed beef price spike can’t be compared with “normal” markets because of so many production and supply disruptions caused by COVID-19 lockdowns and closures. But this year’s seasonal price strength for the negotiated spot beef market is way out of line with the 2014-2019 average used as normal.
The market turned higher the third week of March and never looked back. Last week’s weekly average choice boxed beef price of $338.56 per cwt was up from $374.04 last year and the $233.77 average.
CATTLE, BEEF RECAP
Fed cattle traded this week at $119 to $120.50 per cwt on a live basis, down $0.50 to up $0.50 from last week. Dressed-basis trading was at $189 to $191, steady to down $1.
The USDA choice cutout Wednesday was up $0.04 per cwt at $338.65, while select was up $1.69 at $307.87. The choice/select spread narrowed to $30.78 from $32.43 with 81 loads of fabricated product and 21 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.00 to $1.07 a bushel over the Jul futures and for southwest Kansas were unchanged at $0.70 over Jul, which settled at $6.90 ¾ a bushel, up $0.10 3/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $140.04 per cwt down $0.08. This compares with Wednesday’s Aug contract settlement of $148.27 per cwt, down $0.97.