Cash Cattle Prices Seen About Steady

5-2-14 – Cash cattle trading is expected in the Central and Southern Plains today at roughly steady prices. Early bids of $143 per cwt on a live basis were rebuffed by feedlot managers, and there were reports of some $145 bids in Nebraska being turned away.\r\n\r\n Cattle traded last week at $145 to $146 live and $235 to $236.50 on a dressed basis, and the April futures contract’s expiration Wednesday pointed to a $245 trade this week.\r\n\r\n The pace of cattle slaughter is up this week from the same period last week, indicating a larger weekly total through Saturday. However, even with a larger weekly kill to, say, something around 606,000 head, slaughter would still be below last year’s 622,260 and well below a year ago’s 663,520. \r\n\r\n But the week-to-week increase seems to be more important to meat markets currently. The USDA’s boxed-beef cutout values peaked on Wednesday and fell sharply on Thursday as supplies overran demand. The USDA Thursday reported “light to moderate demand and moderate to heavy offerings.”\r\n\r\n The USDA’s choice cutout Thursday dropped $2.76 per cwt to $230.34, and the select value fell $1.31 to $220.98. Both dropped below week-earlier quotes of $233.80 and $222.07, respectively.\r\n\r\n The USDA reported that 102 loads of fabricated product were sold into the spot market Thursday.\r\n\r\n Cattle slaughter is expected to rise seasonally into the summer and may even surpass last year and the average for a bit, based on first-quarter feedlot placements.\r\n\r\n \r\n\r\nHOG SLAUGHTER EXPECTED LOWER\r\n\r\n \r\n\r\n However, the National Pork Producers Council is estimating hog slaughter could be down by more than 10% this summer as the effects of the Porcine Epidemic Diarrhea virus become more evident. Veterinary officials estimate the virus, for which there is no vaccine, has already killed millions of baby pigs, threatening pork supplies and supporting futures prices.\r\n\r\n The American Association of Swine Veterinarians’ latest update reported 204 positive tests for PEDv last week, bringing the number of confirmed cases to 6,226 since the virus was discovered in the US last May. There is no firm data on how many pigs have been infected since each “case” could represent one or thousands of animals at a single site.\r\n\r\n Butcher hog weights are up, so cuts to pork supplies won’t be a one-for-one decline with the slaughter rate, but no one expects pork supplies to keep up with last year.\r\n\r\n Speaking to a Congressional subcommittee last week, Howard Hill, president of the NPPC, said hog prices could rise by 15% to 25% and consumer pork prices by 10% to 12%.\r\n\r\n Rising pork prices would tend to support beef prices by limiting alternatives.\r\n\r\n So far this week, the USDA’s estimated total hog slaughter at 1.585 million head, and while this is up from last week’s 1.522 million, it lags last year’s 1.658 million.\r\n\r\n \r\n\r\nFEEDER CATTLE KEEP MOVING HIGHER\r\n\r\n \r\n\r\n Feeder cattle futures finished sharply higher Thursday amid technical support and commodity fund buying interest taking prices to new contract highs. Prices are mixed in overnight action as traders consolidate their positions prior to the weekend.\r\n\r\n Cash feeder markets were off a little Wednesday, which may have something to do with the pause in overnight futures movements.\r\n\r\n The Apache Video auction reported 290 head of medium and large No. 1 steers weighing 675 pounds at $191.75, and El Reno, OK., reported 111 medium and large No. 1 steers weighing 664 pounds at $197.78.\r\n\r\n The CME Feeder Cattle Index for the seven days ended Wednesday was $179.03, down $0.69, while the May futures contract settled Thursday at $183.95, up $2.75. June live cattle settled at $139.25, up $2.05.\r\n\r\n \r\n\r\nIN OUR OPINION\r\n\r\n \r\n\r\n–Retail grocers and restaurants appear to have their early May beef bookings complete and are waiting to gauge consumer demand before filling in for the Memorial Day holiday.\r\n\r\n–The feeder cattle market is technically overbought and due for a correction, but the fear of even higher prices is likely to keep it that way.\r\n\r\n–Escalating clashes in Ukraine make a Ukraine civil war a greater possibility. \r\n\r\n–From freezing temperatures Wednesday and Thursday morning, temperatures in the Plains could climb to more than 100 degrees this weekend, stressing wheat and livestock with the sudden change.