Steer Prices At A Decision Point

Slaughter steer prices in the Southern Plains are at a decision point.  Do they follow the seasonal and trend lower into late July or follow last year’s market and turn higher?

Last week’s light trade yielded an average Southern Plains price of $154.91 per cwt on a live basis, a drop of $4.97, or 3.11%, from $159.88 a week earlier, which was down slightly from $160.87 the week before that.

Southern Plains slaughter steer prices remain above last year, although not as sharply higher as they were last year.  Some market analysts say they expect prices to remain above last year, but if they do, they’ll have to follow last year’s trend and not the seasonal.

It is possible for prices to continue declining for another week and still remain above last year, but the gap will narrow significantly.

Essentially, Southern Plains slaughter steer price movements have mirrored last year’s more closely than the average of the previous five years since the first week of February.  However, this is the week when last year’s prices diverged from the average trend and jumped higher.

 

SHOWLISTS WORKING AGAINST PRICES

 

After last week’s extremely light cash cattle movement, feedlot showlists this week swelled with last week’s unsold inventory and this week’s new additions.  Lists aren’t up as much as some feared, but they’re still higher.

Cattle-Fax, a market advisory service in Denver, CO, said estimated showlists among member feedlots this week were up in all major feeding states except Colorado, which was down 77 head.

And those showlists likely are loaded with what once would have been considered overly fat cattle.  Many feedlots are feeding cattle longer than ever, resulting in larger cattle going to slaughter.

The number of cattle on feed longer than 120 days remains above last year and the five-year average, according to an examination of USDA data.  It would seem that the presence of long-fed cattle narrows the window of marketability for the feedlots, squeezing them to sell, even at lower prices and greater damage to their margins to avoid packing plant discounts for too much fat.  This might make last week’s light trade even more significant for this week’s prices.

 

CASH CATTLE MARKETS QUIET

 

Reported prices last week ranged from $155 per cwt on a live basis up to $158.  Most sellers preferred to stick with their $163 asking price believing consumer beef demand for Father’s Day observances and for the Independence Day holiday would force packer buyers to step up.

But they didn’t.

There are indications that cool, rainy weekend weather in major consuming areas is cutting into grilling activities and meat consumption.

Dressed-basis action also was limited with scattered trading from $246 to $260, versus $252 to $253 the previous week.

Beef prices Monday were lower, with the USDA choice cutout at $244.11 per cwt, down $0.54, and the select cutout at $236.31, off $1.26.  Volume was light with 55 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Friday was $225.93 per cwt, up $1.45, compared with the Aug futures settlement of $222.85, up $0.95.