The bloom is off the rose for the cattle industry as the futures market, cash prices for slaughter-ready steers, feeder cattle and even slaughter cows fall in January.
USDA statistics show Southern Plains slaughter steer prices last week averaged $159.82 per cwt, down $9.89 from $169.65 in the first full week in January – a 5.83% drop in less than a month.
A graph of weekly steer prices from the Livestock Marketing Information Center shows the steep dive in prices, compared with last year’s weekly price moves and the previous five-year average. The graph shows a stark contrast when compared with last year and even stands out against the steady-to-weak movement of the January average.
FEEDER CATTLE ALSO DOWN
Feeder steer prices also are in a steep decline. During the month, weekly prices for 700- to 800-pound Southern Plains medium and large No. 1 feeder steers fell $20.48 per cwt, or 8.72%, to $214.27 from $234.75 the first week of the month.
An LMIC graph illustrates the sharp contrast this January’s feeder steer prices have to last year and the average.
The CME’s Feeder Cattle Index of feeder cattle auction prices, by which its futures contracts are settled, has been in a similar decline since peaking at $235.22 per cwt as of Jan. 8. It was listed Monday at $217.61, a decline of $17.61, or 7.49% since the peak.
Many traders are watching this index because the Jan feeder cattle futures contract expires Thursday, and the separation between the two is large, and both are going down. Jan settled Monday at $211.65, down $2.05 from Friday and $5.96 below the Index.
BEEF PRICE TREND NEAR AVERAGE
However, the trend in beef prices has been near the average, even though actual price points are well above last year and the previous five-year average. The USDA’s weekly choice cutout value rose during the second week of January to $261.51 per cwt from $252.76 but fell again the third week. If history is any indicator, the choice cutout will decline into its annual low in February, rise into early summer and then fall away during the dog days of summer.
Last year’s summer rise in beef prices can be attributed to tight supplies and a good export market.
The USDA’s choice cutout Monday was $251.41, down $2.33 from Friday, and the select cutout was $244.79, down $2.44. There were 94 loads of fabricated product sold into the spot market.