Average fed slaughter cattle prices continue to work lower, and the bottom may not come until late September or early October, according to USDA data.
The data, collected and disseminated by the USDA’s Agricultural Marketing Service, show weekly Southern Plains fed steer prices last week were $112.33 per cwt on a live basis. This was down $2.59, or 2.25%, from $114.92 the previous week, which saw prices rally from $109.94 the week before.
SOUTHERN PLAINS STEERS WORK LOWER
AMS figures show this year’s weekly average prices for steers in the Southern Plains diverged from last year in early March. Since then, they rallied through April, giving hope to many that the market was shifting into high gear for the second straight year.
However, while the April trend toward higher fed steer prices resembled last year’s pattern, it did so at a lower level. The price rally two weeks ago also resembles last year’s June pick-me-up but at an even wider difference with last year than the April rally.
WHAT IF?
What if Plains fed steer prices followed last year’s trend?
If weekly fed steer prices followed last year’s trend, they would bottom in the first week of September as new-crop corn comes to market and slaughter steer dressed weights begin to level from the seasonal summer increase.
But if prices follow the 2012-2016 average, they won’t bottom until the last week of September.
Just where they will bottom is anybody’s guess, but if the market maintains its current percentage spread with last year’s sale results, the bottom could be around $102.42 per cwt.
Weekly average dressed steer carcass weights have made the seasonal bottom and are headed higher into fall. Last fall and winter’s lighter calf placements are working through the system, leaving more yearling placements in the slaughter mix.
That trend will continue until cooler fall temperatures cut into growth rates sometime in late fall.
The correlation in fed steer prices with steer carcass weight seasonalities is easy to see. Variations from year to year usually can be explained by changes in weather or input cost factors.
COW KILL REMAINS ABOVE AVERAGE
Meanwhile, the weekly average beef cow slaughter rate remains above last year and the 2012-2016 levels despite the weekly average boxed cow-beef cutout value being below last year and the previous five-year average.
Through early May, the boxed cow-beef cutout value was above the 2017 level, but in mid-May the averaged crossed below last year. In spite of this, the beef cow slaughter rate has remained above last year and the average since February.
And while the cow kill rate takes seasonal dips, it remains elevated.
CATTLE, BEEF RECAP
Eleven hundred head of Nebraska cattle sold Wednesday on the Livestock Exchange Video Auction at $110 per cwt, steady with the last sales three weeks earlier.
Limited cash trade was reported last Wednesday at $180 per cwt on a dressed basis, down $4 from the previous week. Live-basis cash action was seen at $110 to $113, down $2 to $4.
The USDA choice cutout Wednesday was down $1.41 per cwt at $218.29, while select was off $1.25 at $201.05. The choice/select spread narrowed to $17.24 from $17.40 with 126 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $141.41 per cwt, down $0.07. This compares with Wednesday’s Aug settlement of $149.42, down $0.20.