Cash fed cattle prices in the Plains are reaching a decision point. Either they peak within the week or they reach an annual top sometime in late March or late April.
The data show beef prices have a strong spring seasonal higher, but cattle prices may fade.
There has been some debate among cattle traders about the direction of fed cattle prices going forward, and without key USDA data, the debaters are left to wonder where supplies are sitting.
Weekly average slaughter cattle cash prices are reported by the USDA’s Agricultural Marketing Service and compiled by the Livestock Marketing Information Center in Denver. The data show that the annual high in fed cattle prices is approaching. What the data don’t show is just exactly when this top occurs.
WHAT THE DATA SHOW
The AMS data show weekly fed cattle prices this year closely approximating last year through last week when the average Southern Plains fed cattle price on a live basis was $124.98 per cwt. This was up from $123.94 the week before but down from $125.92 in the same week a year earlier.
If fed cattle prices peak at the same time they did last year, then this week’s average will be higher than last week’s and set the 2019 top price.
However, cash cattle prices in the Southern Plains last year and so far this year are below the previous five-year average. If prices for slaughter-ready cattle depart from the 2018 trend, they have a good chance of moving up to mirror the average time period for the annual top in the last week of March or the last week of April.
WHAT FUTURES SHOW
Futures prices generally agree with the five-year average timeline. The Apr contract settled Thursday at $127.37 per cwt, up from the soon-to-expire Feb contract, which settled at $126.12.
However, the Jun contract settled at $118.27 with Aug at $114.65, a clear indication of trader expectations for a seasonal decline in prices.
But recent activity also shows some hesitation to take prices higher without some indication that they should be higher. A spike higher on Jan. 31 could not be held, and prices have struggled higher again, continuing a pattern of hard-fought highs followed by three to four days of declines.
Wholesale beef prices are on a 2019 trend to be higher than 2018, but they are close to the 2013-2017 average. Seasonally, they peak in mid-May.
CATTLE, BEEF RECAP
No fed cattle sold Wednesday on the Fed Cattle Video Exchange, compared with 161 a week earlier at $124 to $124.50 per cwt.
A few trades were reported this week at $198 to $200 per cwt on a dressed basis, steady to up $1 from the bulk of last week’s trade. Live-basis cattle sold lightly in a range from $125 to $126 per cwt, up $1.
The USDA choice cutout Thursday was down $0.37 per cwt at $216.07, while select was down $1.60 at $210.41. The choice/select spread widened to $5.66 from $4.43 with 75 loads of fabricated product sold into the spot market.
There were no fresh delivery notices Thursday. But there were five heifer retenders and 10 steer retenders at 1, 25 heifer retenders at 2, five heifer and 10 steer demands at 1 and 25 heifer demands at 2.
The CME Feeder Cattle index for the seven days ended Wednesday, was $141.50 per cwt, down $0.29. This compares with Thursday’s Mar contract settlement of $144.07, up $0.55.