Cash Cattle Prices Nearing A Top?

Cash cattle prices may be topping out in spite of a seasonal tendency to move higher through the rest of the year.

A Livestock Marketing Information Center graph of USDA average Southern Plains fed cattle prices for the year shows the downward path the market has been on since Jan. 1.

A pronounced dip in September was the result of heavy slaughter of extra heavy cattle.  Such slaughter rates have since declined, but the extra heavy cattle keep coming to market.

Since bottoming the last week of September at an average $120.14 per cwt, the market has bounced to $137.96 for the last two weeks.  This puts prices squarely back in the downward sloping price range.

And the steady prices over the last two weeks suggests the market may be losing some of its push.

 

MEAT PRICES STRUGGLING

 

To be sure, seasonal demand for beef rib primals is present as wholesale prices for these items rose through October.  But beef prices have struggled to retain overall seasonal strength.

Some will argue that the latest bounce in the USDA’s choice beef cutout value is linked to seasonal demand for the ribs.

That may be true to a point, but there are some serious drags on the market, preventing the type of rally in beef prices that would bring a gleam to the eyes of cattle sellers.

For one thing, steer carcass weights keep climbing, showing that cattle feeders continue feeding cattle to ever larger sizes to gain the extra income from selling cattle by the pound.

In the latest week of USDA data, the week of Oct. 17, steer carcass weights averaged 930 pounds, and heifer weights averaged 846 pounds.  Both were up two pounds from the week before, and steer carcasses were up 31 pounds, or 3.45%, from 899 last year.  Heifer carcass weights were up 25 pounds, or 3.04%, from the year-earlier weight of 821 pounds.

Total beef production the last week of October declined 1.3 million pounds as total estimated cattle slaughter declined to 553,000 head from 556,000 the previous week.

 

BEEF DEMAND QUESTIONED

 

Holiday beef demand also can be questioned as the choice/select spread remains well short of last year or the average.

It might be argued that those extra heavy fed cattle are producing more choice carcasses, thus keeping the choice/select spread unusually narrow.  It’s true that more choice carcasses are being produced than last year or the average, but the percent of choice to select carcasses is declining seasonally, albeit at the higher level.

If the choice/select spread is being influenced by the higher production of choice to select carcasses, the spread should see some pressure soon as the seasonal choice/select production ratio tilts upward through January.

 

CASH FED CATTLE MARKETS UNTRADED

 

Cash fed cattle markets in the Plains are untraded this week.  Cash action last week at mostly $138 per cwt on a live basis with some up to $139 was up from $136 to $138 the week before.

Dressed-basis trade was reported at $206 to mostly $208 and up to $210, compared with $206 to $209 a week earlier.

Wholesale beef prices Monday were mixed, with the USDA choice cutout value at $219.61 per cwt, down $0.43 on the day, and its select cutout at $212.52, up $0.45.

The choice/select spread narrowed to $7.09 from $7.97 on Friday, and there were 91 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Friday was $193.24 per cwt, down $0.03.  This compares with the Nov settlement Monday of $192.27, up $1.37.