Packer buyers continue to find it hard to source adequate supplies of slaughter cattle, as evidenced by this week’s $6.00-per-cwt jump in prices paid in the Central and Southern Plains.
Cattle traded at $162 per cwt on a live basis, up from a range of $155 to $157 last week as feedlot managers continue to control their weekly showlists in spite of larger first-quarter placements. It may have been the knowledge of higher placements with the potential to overrun the summer market that encouraged them to stretch the growth rate of some and smooth out summer marketings.
But there is a limit to how slowly cattle can grow in the feedlot, and those cattle have to come to market sometime. They likely will swell the ranks of late summer and early fall marketings, smoothing out an expected dip as the effects of a 63-year low in the US cattle herd become apparent again.
BEEF PRICES PUSH TO RECORD HIGHS
As a result of the tighter-than-expected slaughter cattle supplies, beef prices have pushed to record highs. The USDA Thursday reported its choice boxed-beef cutout at $255.56 per cwt, up $2.97 and up $5.75 for the week, a 2.30% weekly gain.
The USDA’s select beef cutout was reported at $252.84, up $4.13 on the day and up $8.60, or 3.52%, for the week.
The choice/select spread narrowed significantly Thursday to $2.72 from $3.88 on Wednesday, and there were 129 loads of fabricated product sold into the spot market.
The strong beef demand also goes against predictions for a period of weaker consumer interest over the summer. Sources say moderate temperatures over much of the contiguous 48 states this summer have allowed more grilling than in recent, drought-ridden summers, which usually means more beef consumption.
CATTLE-ON-FEED EXPECTED TO SHOW PLACEMENT CUT
Today’s scheduled monthly USDA Cattle-On-Feed report is expected to show a decline in placements during June, the result of greener pastures. Sources say Plains pastures this year have been able to support grazing past normal limits, going so far as to support haying while the cattle were still grazing.
June placements, however, may be affected by increased rates of imports from Mexico and Canada, especially Mexico. USDA figures show a surge in imports during the month.
Surveys show traders expect feedlot placements to be down about 3.4% from a year ago with marketings to packers down about 2%. The end result is expected to be a feedlot population that is down about 1.7% from a year earlier.
That would continue a general decline in available slaughter cattle from year-earlier levels into the fall and likely beyond. Sources say it will be at least another year before supplies begin to grow again as the total herd rebuilds, more calves are born and more feeder cattle are placed on feed.
CORN PRICES CONTINUE DOWNTREND
Corn prices continue to trend lower amid reports of high plant counts and filled ears. Many report expectations for ears to fill completely this year, and personal observations have found instances of two ears per stalk.
Since peaking on May 9, Sep corn futures have fallen 26.57% to Thursday’s low of $3.68 ¼, and each weather report or crop report continues to show advancing conditions and erode prices further.
Some have said prospects for a record crop and low prices may have delayed some feedlot placements in June. However, record-high feeder cattle prices indicate strong demand for yearlings. Feeders likely are biding their time into fall to buy corn because they will have a better handle on availability by then.