It looks like fed cattle prices have passed their annual peak, a condition that appears to be in the futures market as prices for delivery months through October are progressively lower.
Weekly average fed steer prices in the Southern Plains topped out at $128.00 per cwt the last week of February and nearly tied it the following week at $127.98, according to USDA Agriculture Marketing Service data compiled by the Livestock Marketing Information Center.
In addition, prices are declining seasonally. Last week’s average Southern Plains fed steer price was $122.36 per cwt., the lowest fed prices since December.
Weekly average choice boxed beef prices peaked in late April at $233.49 and have since decreased about $10.
MEMORIAL DAY BUYING DONE
Most wholesale beef purchasing for the Memorial Day holiday is past. Middle meat prices are steady to weak after an apparent early first seasonal peak for some cuts, especially ribeyes, said Oklahoma State University Agricultural Economist Derrell Peel in a weekly letter to Extension agents.
That may reflect widespread wet, cold weather across much of the country that is delaying summer beef demand, Peel said.
Boxed beef cutout values likely will strengthen again with Independence Day buying commencing in middle to late May, he said. Warmer summer weather also could boost beef demand seasonally in coming weeks.
Part of the weakness in beef prices is coming from weaker prices for the chuck and round, Peel said. While end meat prices typically weaken in the summer, current weakness, especially for chuck products also may reflect slower export demand.
INTERNATIONAL TRADE DOWN
Trade data for March show beef exports down 5.7% year over year, with first-quarter, beef exports down 4.7%.
Beef export growth the past three years has been especially strong for products from the chuck, he said. Current forecasts are for 2019 beef exports to be quite close to 2018.
March beef imports were up 6.3% year over year leading to a 2.3% first-quarter rise. Total 2019 beef imports also were projected to hold close to 2018 levels, Peel said.
BEEF PRODUCTION UP, PRICES WEAK
2019 beef production is up less than 1% as cattle slaughter, up 1.3%, is partially offset by lighter average carcass weights, he said. Steer and heifer carcass weights are declining seasonally but latest weekly carcass weights for both are above year ago.
Calf and stocker prices have dropped significantly after peaking in April, Peel said. While good moisture conditions imply good summer forage prospects, cooler-than-normal weather has delayed growth.
Calf prices generally decline from first quarter peaks to seasonal lows in the fall, but heavy feeder cattle prices, which seasonally grind higher from now until late summer, also dropped recently.
Peel suspected that largely was because of delayed feedlot marketings resulting from earlier winter weather combined with continuing wet, sloppy feedlot conditions.
Heavy feeder prices likely will get back on seasonal track as feedlots catch up from earlier delays and pen conditions improve in the next few weeks, he said.
CATTLE, BEEF RECAP
Cash cattle trading was reported last week at $120 to $121 per cwt on a live basis, down $3 from the previous week. Dressed-basis trading was reported at $193 to $195 per cwt, down $5 to $7.
The USDA choice cutout Monday was up $0.47 per cwt at $221.58, while select was up $1.43 at $208.89. The choice/select spread narrowed to $12.69 from $13.65 with 63 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Friday, was $135.39 per cwt, down $0.13. This compares with Monday’s May contract settlement of $135.05, down $2.57.