Cattle traders’ ideas of what the cash fed cattle market will do this week have gone from lower, to steady/weak to no worse than steady as slaughter rates remained strong for a second week.
Cumulative slaughter through Tuesday was estimated at 220,000 head, the same as last week but behind last year’s 235,000. Last week total kill of 544,000 head also was above the previous week’s 533,000.
Seasonally, cattle slaughter should be rising toward its mid-June peak, but whether packers are short cattle is another guess. It would seem that packers wouldn’t plan for increased slaughter without having some idea of where those cattle will come from. Besides, next week, they can dip into May contract and formula cattle.
STEER PRICES WORKING LOWER SEASONALLY
Slaughter steer prices typically decline at this time of year anyway. A Livestock Marketing Information Center graph depicts this trend nicely.
After peaking in late March or early April, slaughter steer prices in the Southern Plains usually slide toward a late July seasonal low. Last year, the seasonal low came in the last week of May as feedlot offerings to packer buyers tightened.
At that time, feedlot populations were declining as ranchers kept more heifers at home for breeding and herd rebuilding.
Herd rebuilding is still under way, so market volatility may make the summer bottom arrive early like it did last year. However, a price slide this week seems to be in the cards historically.
That’s not to say some parts of the country couldn’t see a price bump. Another LMIC graph of the five-area weighted average weekly price shows that last year, prices bumped up in early May before declining to the June bottom.
The five-area USDA price takes in Western Corn Belt states so a comparison of the two charts shows that last year, there was an early May price bounce, but it was concentrated in those western Corn Belt areas. The previous five-year average, however, shows the overall trend to be down into late July or early August.
So, since cattle slaughter is going up, and cattle prices are going down, it seems the number of cattle available for slaughter is going up.
CASH CATTLE MARKET REMAINS QUIET
No trading was reported in Plains cash cattle markets Tuesday. No packer-buyer bids were reported, but asking prices surfaced at $161 to $162 per cwt on a live basis and $263 on a dressed basis.
Cash cattle markets last week traded lower to $157.50 to $160, mostly $158 on a live basis and at $252 to $254, mostly $253 on a dressed basis. These were $3 to $6 below the previous week’s mostly $160 to $161 and $256 to $260.
The USDA’s beef cutout value Tuesday was steady to higher, with choice at $257.72 per cwt, up $0.83 from Monday and select at $247.98, unchanged. Volume was active with 120 loads of fabricated product sold into the spot market.
The USDA said beef markets Tuesday were characterized by moderate demand and light-to-moderate offerings. Ribs and loins were steady to firm, while chuck and rounds were weak. Trimmings were higher amid moderate demand and light-to-moderate offerings.
The CME Feeder Cattle Index for the seven days ended Monday was $214.90 per cwt, up $0.55 on the day and $1.07 below the Apr settlement of $215.97.