Cash Cattle Appear Steady/Firm

Cash cattle have yet to trade actively this week, but the few sales that have been reported are steady to higher when compared with last week.

The USDA mandatory five-area weekly accumulated weighted average cattle price report lists 446 head of steers weighing 1,509 pounds selling on a live basis at $161.16 per cwt and 1,446 heifers weighing an average 1,309 pounds selling at $161.29.

That compares with last week’s 266 steers weighing 1,356 pounds selling at $157.46 and 438 live heifers weighing 1,278 pounds selling at $157.26.

On a dressed basis, 756 steer with an average carcass weight of 910 pounds sold this week at $259.07 per cwt, and 608 heifers with an average carcass weight of 839 pounds selling at $258.80.  Last week, only 73 steers had sold on a dressed basis with an average carcass weight of 896 pounds at $250.00.

 

DRESSED WEIGHTS FALLING

 

All of that gives cattle traders only a hint at the final outcome of this week’s cash cattle trading, but on a weekly basis, it seems fed cattle weights are following seasonal norms and are set to decline.  This happens because more calf-fed cattle are in the slaughter mix.  For the uninitiated, calf-fed cattle are those that entered the feedlot as calves rather than as yearlings.

A graph from the Livestock Marketing Information Center shows the seasonal tendencies very well.  Last year’s weights, though higher than the previous five-year average and somewhat more volatile, followed the pattern, and there’s every reason to believe this year will set new weight highs all year while following the pattern.

 

CASH CATTLE PRICE OUTLOOK LESS CLEAR

 

However, as well defined as the outlook for fed cattle is, the future of slaughter steer and heifer prices is less clear.  Over time, the Southern Plains cash price for slaughter steers will hold in a narrow range with some seasonal fluctuations evident.

An LMIC graph shows the seasonal trend along with last year and this year.  It’s evident that steer prices have declined from their annual highs in early January.  It’s also clear that last year’ markets had a tendency to rise unevenly throughout the year.

The same might be expected again this year, were it not for growing supplies of competing meats.  These worries are evident in the futures market’s lower prices going forward.

The diagnosis of highly pathogenic bird flu in a flock of Arkansas turkeys this week complicates matters.  Many countries are expected to expand their bans on US poultry to include Arkansas, the third largest broiler producing state and the fourth largest turkey state.  This could back up poultry into US freezers and pressure the red meats at a time when USDA forecasts had already predicted increased production of poultry and pork in 2015.

Feeder cattle markets are rising, however, showing either a growing confidence in the fed cattle market or overall tightening of feeder cattle supplies or perhaps a little of both.  The CME Feeder Cattle Index has risen every day for the last nine days, reversing a downward trend as calves came off wheat pasture.

The CME Index for the seven days ended Wednesday was up $1.35 per cwt at $213.93.