Slaughter steer prices in the Southern Plains traded about steady this week at mostly $133 per cwt with some instances of $134 being paid.
So far this year, cash cattle prices have held in a narrow range, shuffling between an average $139.14 per cwt on the top to $133.14 on the bottom. This flat market is contrary to the 2010-2014 average, which has prices rising from about $115 to $124 during the period.
What has many futures traders spooked is the tendency for the market to peak this week and head lower into May.
Last year, cash prices for slaughter steers was $167.45 per cwt, $33.61, or 20.1%, above last week’s $133.84. However, the cash price last year tumbled from this early April peak to a low of $116.51 the week ended Dec. 20, a drop of $50.94, or 30.4%.
To be sure, prices did bounce during the fall as demand for holiday rib roasts kicked in. The bottom during the week ended Oct. 4 was $117.72 per cwt.
BEEF’S ROLE
Many market analysts are talking about a seasonal decline in beef demand as grocers get their inventories full of grilling fare, but the data does not support such theories on a large scale.
While the five-year-average price for choice boxed beef does decline in late March into the first week of April, it tends then to increase into May or early June when it begins a summer sag into August. But from the early April low to the late-August rally, prices tend to remain in a narrow range.
However, beef prices last year didn’t perform like normal. Instead, they moved unevenly higher into early May and then dropped unevenly into the December low. Last year’s prices were much more volatile than the average, and the summer/fall price decline certainly was counter-seasonal.
It’s difficult, then, to draw conclusions about where choice beef prices will go from here. If they follow the five-year average, they will hold within a $5 to $7 range into October with little bounces that are associated with a holiday or back-to-school buying.
But if prices follow last year, they will continue to rise from here into a May top. From there, they will decline into late fall or early winter when weather conditions tend to have a greater effect on the cattle.
GRUDGING CASH CATTLE TRADE
Limited cash cattle business was reported in the Plains this week at $132 per cwt up to $134 with most at $133. Packer buyers were said to be bidding $132 to $133 with no takers.
Cash cattle last week traded at $132 to $133 per cwt on a live basis and $214 to $216 on a dressed basis. Both were down about $3 from the previous week.
The USDA’s choice cutout price Wednesday was down $1.29 per cwt at $216.41, and select was off $1.77 at $207.43. The choice/select spread widened to $8.98 from $8.50 as 158 loads of fabricated product were sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Tuesday was $157.79 per cwt, down $0.50. This compares with the Apr CME settlement Wednesday of $153.18, up $0.55.