Most Cattle Fundamentals Unchanged

Live and feeder cattle futures shot limit up the last two trading sessions based on lighter-than-expected feedlot populations, but no other major fundamental factor has changed for either market.

Supplies continue to outpace demand, cash prices for cattle and beef continue to fall, and post-holiday, winter demand typically is lackluster.  Red meat production also is rising rapidly, giving consumers the advantage of playing one against the other once holiday purchases are made.

This year’s production turned sharply higher, surpassing 1.0 billion pounds in each of the last two weeks rather than level out before the sharp holiday downturn.

The USDA said red meat production amounted to 1.04 billion pounds last week after being 1.01 billion the week before.

 

BEEF PRODUCTION SETS 2015 HIGH-WATER MARK

 

Without looking at the breakdown of total red meat production, it might be assumed that the total was being affected largely by pork and lamb production, but such assumptions would be inaccurate.

USDA data show that weekly beef production the last two weeks set 2015 records at 492.1 and 499.2 million pounds, respectively.

With two holidays back to back this week and next, it’s safe to assume that beef production likely will drop seasonally each week.  But still, it’s easy to see that total pounds of beef production the last two weeks bested any week in 2014.

 

PORK PRODUCTION KEEPS CLIMBING

 

Even though pork production isn’t the only factor in the rise of total red meat production this year, it certainly dominates.  USDA data show record-high tonnage as production remained above the corresponding 2014 week in all but a few holiday-shortened weeks.

Pork production last week totaled 532.1 million pounds, compared with 517.7 million the previous week, 486.7 million the same week a year ago and the previous five-year average of 484.12 million.

With the Christmas and New Year’s holidays to shorten work schedules at the packing plants, it’s a pretty sure bet that pork production will fall away the next two weeks along with every other meat.  But since the market likely has prepared for the holidays, meat pricing likely won’t fall away.

 

CASH CATTLE TRADE INACTIVE

 

Cash cattle markets Monday were inactive as buyers and sellers watched futures prices skyrocket.  No bids or offers were reported, although feedlot showlists were sharply lower in Texas and Kansas, possibly giving sellers a little price leverage this week.

Cattle markets last week were active with trade spread out over four days.  Prices were mostly $117 to $118 per cwt on a live basis, down $1 from the previous week, and $184 to $188 on a dressed basis, down about $2.

The USDA reported lower wholesale beef prices Monday with choice down $2.86 per cwt from Friday to $191.28, and the select cutout off $2.42 at $183.93.  The choice/select spread narrowed to $7.35 from $7.79 on Friday, and there were 135 loads of fabricated product sold into the spot market.

The USDA said rounds were steady while ribs, chucks and loins were weaker.  Trimmings were moderately to sharply lower amid light demand and heavy offerings.

The CME Feeder Cattle Index for the seven days ended Friday at $154.52 per cwt, down $0.17.  This compares with the Jan settlement Monday of $155.50, up $6.75.