Cash Cattle Prices Slow Rate Of Decline

Average cash cattle prices slowed their rate of decline last week, even though the spread between the weekly high and low expanded slightly.

Traders last week reported cash cattle trades ranging from $159 to $160.50 per cwt.  However, the average price for slaughter steers in the Southern Plains last week was $159.37, down $0.45, or 0.28%, USDA statistics showed

That compares with a drop of $3.83, or 2.34%, from $163.65 the previous week.

It’s clear that the trend is down, although it could be argued that this is somewhat seasonal.  Traders will be watching cattle pricing in coming weeks, but some traders say Plains feed yards are loaded with plenty of cattle that have been there 120 days or longer.

After the monthly cattle-on-feed report Jan. 23, some trade sources pointed out that the three-month rise in total numbers on feed indicate a rising number of cattle that have been on feed longer than usual – on average.

Those cattle will weigh more when they hit packer kill floors and produce more beef per head.

Additionally, the semi-annual US cattle inventory report Friday showed more cattle in US herds and more calves than expected, which weighed on cattle and feeder cattle futures Monday.  Both settled sharply lower, with all but one feeder cattle delivery month down the daily limit of $4.50 per cwt.

 

DEBATE ABOUT INVENTORY REPORT’S EFFECT

 

In the wake of the inventory report, which showed a US herd of 89.8 million head as of Jan. 1, some economists and market analysts expounded on how the increases were not very large and really didn’t change the US herd size materially.

Oklahoma State University Extension Economist Darrell Peel was quoted saying the report didn’t change the market fundamentals much, if any, for the year.  He called the increase “marginal” and said cattle feeders would find the report of little comfort when they try to replace cattle sold to packers for slaughter.

The Daily Livestock Report by Steve Meyer and Len Steiner, said pre-release estimates may have been downplayed by traders stung by a series of continually lower USDA Cattle reports over the last several years.  In other words, the estimates provided to media outlets taking the surveys may not have represented traders’ true feelings about the herd size.

If that were the case, Meyer and Steiner said, the report’s effect on the market may be short-lived and marginal.

In any case, the market may not get another good look at the herd size until next year.  The next report is in July, but it generally is considered of lesser importance because cattle producers can change more easily their minds about herd intentions in the last half of the year.

 

CASH MARKETS REMAIN QUIET

 

Cash cattle markets are quiet with no bids or offers reported.

Wholesale beef prices were mixed, providing scant support to the futures market.  The choice cutout was up $0.17 per cwt at $242.61 while select was down $0.14 at $235.60.

Spot volume was modest with 98 fabricated loads sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Friday was $211.54 per cwt, down $0.07.