Rising fed cattle prices are leading the cattle complex higher, said Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel, in a letter to Extension Agents called Cow-Calf Corner.
The daily 5-Market negotiated cash fed cattle price reported on Thursday by the USDA Agricultural Marketing Service, was $172.33 per cwt, a record high daily fed cattle price, Peel said. This was followed on Friday with a price of $175.87.
The previous record daily price was $172.08 per cwt on Nov. 26, 2014, he said.
A QUICK OUTLOOK
Where do fed prices go from here? Peel asked. In a steady market, fed prices typically would peak seasonally about now and move lower through the third quarter before increasing into the end of the year.
That sort of typical pattern currently is priced into the live cattle futures with futures prices decreasing from the nearby Apr (currently just over $171 per cwt) to Jun (about $163 per cwt) and Aug (at $162 per cwt) before increasing in the Oct contract (to $166 per cwt) and Dec (at $171 per cwt), Peel said.
At this time, live futures prices do not exceed nearby cash levels until the Feb 2024 contract (currently about $174 per cwt).
Will fed prices follow this typical seasonal pattern this year?, he asked. Maybe not.
In 2021 and 2022, the strong uptrend in fed prices offset seasonal tendencies, with prices moving continually higher, and there is good reason to expect the uptrend to continue in 2023, Peel said. But the seasonality priced into the markets now may fade as markets trend higher going forward.
FEEDLOT INVENTORIES FADING
Feedlot inventories are just beginning to fall with ever tighter feeder cattle supplies and are likely to continue decreasing at least through 2023, pushing fed prices higher, he said. Fed prices may increase more slowly or plateau briefly in the summer months but are not likely to have a typical seasonal decline going forward.
Feeder cattle prices have not yet reached record levels but are advancing to surpass previous price peaks, Peel said.
Oklahoma combined auction prices for 500– to 550-pound, medium to large No. 1 steers for the week ending April 7 were $251.41 per cwt, the highest since August 2015, he said. The record price for this weight group was $306.42 per cwt on Dec. 12, 2014.
For heavier feeders, 800- to 850-pound steer prices averaged $189.53 per cwt, the highest price since Oct. 23, 2015, he said. The highest previous price for these steers was $238.87 per cwt. on Oct. 10, 2014.
Feeder cattle prices currently are about 80% of the record prices in late 2014 and undoubtedly will exceed previous highs within the coming months.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $178.82 per cwt to $180.29, compared with last week’s range of $172.20 to $179.46 per cwt. FOB dressed steers, and heifers went for $276.99 per cwt to $281.66, compared with $261.33 to $273.20.
The USDA choice cutout Tuesday was up $1.08 per cwt at $307.06 while select was up $2.29 at $291.61. The choice/select spread narrowed to $15.45 from $16.66 with 83 loads of fabricated product and 30 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.63 to $1.75 a bushel over the May corn contract, which settled at $6.77 1/2 a bushel, up $0.01.
No live cattle futures deliveries were tendered Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $206.37 per cwt, up $0.73. This compares with Tuesday’s Apr contract settlement of $205.92 per cwt, up $0.37.