The August cattle market was typical in some ways and atypical in others, said ADMIS Senior Livestock Analyst Chris Lehner, in an outlook letter.
SUMMER BEEF PRICES SAG
Beef prices a week after July 4 through the first week of August drifted lower as summer heat kept ovens turned off, Lehner said. Consumers bought beef that could be cooked quickly inside or on the grill.
On July 3, choice boxed beef was $328.73 per cwt and as the heat intensified through July and into August, consumers also spent money on summer vacations and high energy bills for air conditioning, he said. Beef prices fell. By Aug. 1, choice beef dropped to $306.10 per cwt.
Consumers shifted from high-priced cuts such as steaks for July 4th, to less expensive beef like ground round and ground chuck to chubs made of all grades and grinds, Lehner said. This is a typical pattern during the summer, and it was followed by another typical pattern in August when beef prices increase for the last big summer beef buying, Labor Day.
From Aug. 1 to Aug. 31, choice boxed beef prices moved up and were back to $313.79 per cwt, he said.
ATYPICAL CATTLE MARKETS
As much as beef buying was typical in August, the cattle market was atypical, Lehner said. US cattle slaughter that had been falling throughout 2023 saw steep declines in August.
The severe record-breaking temperatures in the South and Southwest had cattle in feedlots not gaining weight and the cattle sold often were lower grade, he said. From the week ending Friday, July 14 to Friday, Aug. 11, weekly slaughter went from 633,000 head down to 603,000 head a week, averaging 7,500 head fewer per week.
The last two weeks of August, as more cattle moved, particularly in the Midwest and upper Plains, slaughter did improve and was back to 626,000 head a week, Lehner said.
Cattle prices also were atypical during August, he said. Aug 2023 live cattle futures traded near contract highs in a tight range, he said. On Aug. 1, Aug live cattle settled at $179.50 per cwt, and on Aug. 15 it closed the day at $179.10 per cwt, and by Aug. 31 the contract settled at $179.72 per cwt.
The daily trade high was $181.70 per cwt on Aug. 10, and the daily trading low was $177.47 per cwt on Aug. 18, Lehner said. The contract high for Aug 2023 live cattle was $182.97 per cwt on July 20, 2023.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $182.50 per cwt to $187.80, compared with last week’s range of $181.64 to $186.65 per cwt. FOB dressed steers, and heifers went for $287.19 per cwt to $291.15, compared with $283.68 to $291.26.
The USDA choice cutout Thursday was up $0.56 per cwt at $301.51 while select was off $1.07 at $277.44. The choice/select spread widened to $24.06 from $22.44 with 129 loads of fabricated product and 20 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.48 to $1.61 a bushel over the Dec corn contract, which settled at $4.88 1/2 a bushel, up $0.05 1/4.
The CME Feeder Cattle Index for the seven days ended Wednesday was $252.20 per cwt, down $1.07. This compares with Thursday’s Sep contract settlement of $252.32 per cwt, up $0.80 and Oct’s $254.72, up $2.47.