After a general decline in fed cattle prices since peaking in late March, it’d be natural to think cattle feeders would be looking for a bottom, but the odds are it won’t be for another two or three months.
It’s possible, of course, that the annual price bottom could materialize soon. After all, last year, the bottom came in the last week of June at $106.22 per cwt on a live basis.
However, the average annual bottom for the period from 2013 through 2017 occurs the last week of September at $123.11 per cwt, according to USDA Agricultural Marketing Service data compiled by the Livestock Marketing Information Center.
TRACKING LAST YEAR
The part that likely gives cattle feeders hope that the bottom will come earlier than the five-year average is the fact that cash fed cattle prices in the Southern Plains this year have been tracking last year very closely, crossing back and forth several times.
In fact, last week’s generally reported cash price of $110 per cwt was very close to the $110.89 reported in the same week last year. So it wouldn’t be out of the question to be looking for a bottom to take place in the next two to three weeks, like it did last year.
ON-FEED REPORT NEUTRAL
As expected, Friday’s monthly Cattle on Feed report was considered almost neutral to the futures market. Market analysts said technical indicators like the market being considered to be oversold took precedence over the On-Feed report.
Placements of young cattle into the feed yards in May was considered to be restrained, and some said it was because the feedlots were being cautious in light of the rising cost of corn for feed.
The price of corn is said to be causing more consternation among cattle feeders than many other cattle-feeding factors. The National Agricultural Statistics Service reported a big jump in the percentage of the US corn crop that was in the ground, surprising many in the market.
However, the NASS explained that the percent planted it reports each week is a compilation of what farmers tell them they have planted at any given moment. It has nothing to do with previous acreage estimates. So, if a farmer suddenly decides it is too late to plant the back 40, the percent of his crop that is planted takes a sudden jump.
BEEF PRICES FADING
Boxed beef prices are fading seasonally as well, prompting packer buyers to become much more prudent about how much they bid for slaughter-ready cattle. An annual bottom for choice boxed beef likely won’t come until the first week of October, although a temporary bottom could come in late July or early August.
This summer decline is pretty well backed into a seasonal pattern, so in this sense, traders are telling feeders that the dog days of summer are here.
CATTLE, BEEF RECAP
Cash cattle trading was reported last week at $110 per cwt on a live basis in the Plains down $2 to $4 from last week, and at $182 to $183 on a dressed basis, down $2 to $3.
The USDA choice cutout Monday was down $0.08 per cwt at $219.74, while select was up $0.26 at $199.81. The choice/select spread narrowed to $19.93 from $20.27 with 89 loads of fabricated product sold into the spot market.
No contract delivery notices were served for the Jun live cattle futures contract Monday.
The CME Feeder Cattle index for the seven days ended Friday was $131.41 per cwt, down $0.02 from the previous day. This compares with Monday’s Aug contract settlement of $131.77, down $1.90.