Slaughter cattle prices have been slightly higher for the last three weeks, but could run into some nearby resistance soon if recent history is any indicator.
USDA price records show that Southern Plains fed steer prices tend to dip in late March before peaking in the first week of April. After the peak, prices tend to drift lower into the last week of July as this graph from the Livestock Marketing Information Center shows.
Last year, the cattle market hit a seasonal peak the first week of April at $148 per cwt on a live basis only to decline unevenly to the first week of June when it bottomed at $143.09.
Some traders have said that it’s dangerous to fight the seasonals since the same market influences happen on an annual basis and thus create seasonal trends. That doesn’t mean seasonal tendencies can’t be changed because they can. It’s just dangerous to bet on it.
Last year’s bottoming was earlier than normal because of tight supplies and strong domestic and export demand. This year, the bulls have tight supplies and strong domestic beef demand on their side but they lack the robust export pull of last year because of a stronger US Dollar.
Cattle traders also will have to contend with increasing domestic supplies of pork and chicken that will increase competition at the grocery meat counter.
HIDE, OFFAL VALUES ILLUSTRATE EXPORT DEMAND
Hide and offal values are a good indicator of export demand for beef products. They are the cheapest items domestically, since Americans don’t process the bulk of cattle hides produced or eat many of the internal meats and organs.
However, other countries consider many of those products either delicacies or staples of everyday life. This makes the export market the most lucrative to packers for these items and a bellwether of the export market in general.
If the market is fighting the seasonal, something is amiss. An LMIC graph of the steer hide and offal value shows the market is going counter to the seasonal pattern and has been since December. The average price fell below last year in late February as the Dollar continue to rise and make these items more expensive for foreign buyers.
If foreign buyers have trouble with the cheapest parts of the animal, they surely can be expected to seek alternative sources for the more expensive cuts.
And, if packers are having discount the hides and offal, pressure will come to the live cattle markets.
CASH CATTLE REMAIN QUIET
Cash cattle markets Tuesday were quiet after steady/firm pricing last week at $161 to mostly $163 per cwt on a live basis and $258 to $260 dressed.
No bids from packer buyers were heard as cattle owners get the ball rolling with asking prices of $166 to $167 per cwt on a live basis and around $266 dressed.
Boxed beef prices were higher Tuesday with the USDA’s choice cutout up $1.04 per cwt at $246.83 and select up $1.55 to $244.78. Volume was light, with only 71 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Monday was $216.23 per cwt, up $0.63. Mar futures settled Tuesday at $217.17, up $0.20.