Strong wholesale beef prices were cited for pulling cash cattle and then futures markets higher this spring, but now it seems limp cash cattle and seasonalities are dragging on beef markets.
The USDA’s Agricultural Marketing Service reported the average cutout price for choice 600- to 900-pound beef carcasses last week was an annual high of $250.86 per cwt, up $0.64, or 0.26%, from $250.22 the previous week. Last week’s average choice cutout value also was up $25.33, or 11.2%, from $225.53 last year and up $40.12, or 19.0%, from the 2011-2015 average of $210.74.
A Livestock Marketing Information Center graph shows the value is faltering at a high level and could weaken this week. Values last year tumbled this week, and there is little news that would indicate the market has even more unseasonal life left in it.
And a check of daily boxed beef values through Tuesday shows the value of choice boxed beef was down in four of the last five days. If the weakness holds, the average for this week may fall away, too, which would be right in line with last year’s break when the average dropped to $216.82.
STEER PRICES GAVE OUT WEEKS AGO
Yet slaughter steer prices in the Southern Plains have struggled for the last six weeks after peaking at $144.60 per cwt the first week of May, as shown in an LMIC graph of USDA-AMS weekly price averages.
Cash cattle prices were unable to hold their highs against an inverted futures market, especially when nearby months continued to ride at a much lower level than the cash market until it came time for deliveries.
As it stands now, cash fed steer prices in the Southern Plains are at a crossroads. They could trend sideways until fall when they rise to accommodate holiday beef demand.
Alternatively, cash slaughter cattle prices could continue falling as they did last year when availability increased.
HIGHER SLAUGHTER SHOWS MORE AVAILABLILITY
A check of federally inspected cattle slaughter shows weekly levels closely approximating the 2011-2015 average, which rides above last year until late summer.
Continuing on this path would lead to a higher annual slaughter than last year. Beef production might also rise, if weights remain the same as last year.
But they aren’t.
Since the second week of January, federally inspected carcass weights have been below last year, and were nearly identical to the five-year average last week at 792 pounds.
The lower weights are producing less beef than might be expected with increased kill rates. Last week, about 496.4 million pounds of beef were produced, only slightly above the 2011-2015 average of 495.3 million but 3.4 million, or 0.69%, above last year’s 493.0 million.
So pressure on live cattle prices is being seen, but it could be worse if weights were higher.
CASH CATTLE QUIET
No trade was reported on the livestock exchange video auction last week amid more technical troubles.
Cash cattle traded Tuesday at $132 to $133 per cwt on a live basis, down $4 to $5 from the bulk of the previous week’s action and at $215 dressed, down $3 to $5. Some reports have last week’s cattle being sold for the first week of July.
The USDA’s choice cutout Tuesday was down $2.47 per cwt at $246.99, while select was off $1.48 at $219.88. The choice/select spread narrowed to $27.11 from $28.10 with 89 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $148.24 per cwt, down $1.94. This compares with Tuesday’s Aug settlement at $143.92, down $1.07.