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Cattle Market Summary: Reduced Slaughter Taking A Toll on Market

Author: Kristy


Another week of reduced cattle harvest pressured fed cattle prices and boosted boxed beef cut-out values as packers struggle to turn a buck during the month that they normally post their fastest chain speeds and largest margins. Beef imports are up 31% which is mostly grinding product and moderating the demand for domestic trimmings. Memorial Day beef shelf clearance was disappointing but the industry has high hopes for Father’s Day and the 4th of July with increased temperatures. But, Tropical Storm Bill has ravaged Texas and the lower Midwest once again with heavy downpours and flooding conditions, and many heavily populated areas in the northeast are forecasted to have rainy weather for Father’s Day weekend.

Cash feeder cattle prices found some resistance this week after shrugging off lower fed cattle markets and CME Board pressure in recent weeks. Auction prices were unevenly steady to firm, ranging 4.00 lower to 4.00 higher in major salebarns with most declines noted on heifers and 6 weight cattle. Gains were posted in many direct trade areas early in the week with reports of mid-summer delivery yearlings from the Flint Hills and Osage bringing in the mid 220.00’s for 8 weight steers. However, these offers were pulled back with Thursday’s 2.80 drop on the feeder cattle Board and lower fed cattle market. Still, the Pratt, KS Livestock Auction on Thursday quoted over 200 head of thin-fleshed 915-965 lb steers from 218.25-224.10. Friday’s cattle-on-feed report was neutral to slightly bullish for the cattle market. June 1st on-feed inventory was 101% of a year ago, while May placements were 90% of last year, and May marketings were 92% of the same period in 2014. Figures were very close to expectations with the exception of May placements which were about 3 percentage points lower than the average of analysts’ guesses.

Calf sales continue spotty and all over the board with ample grazing leaving little reason for cow/calf producers to sell until later in the year. Prices ranged 3.00 lower to 5.00 higher across the circuit with the best test continuing to be in the Southeastern calf markets. One salebarn that consistently has top quality calves when no place else does is the Southcentral Regional Stockyards in Vienna, MO. They had another good offering of proven genetic steer calves, weaned and in good condition with prices that were 2.00-5.00 higher. A half load of the black-hided 619 lb steers brought 274.00 with Nebraska commercial feedlots and an assortment of Midwestern farmer-feeder orders vying.

Packers once again reminded the industry who is in charge this week with slaughter levels that were once again over 10% lighter than year ago levels. They were able to set the market with a meager negotiated trade (although sizably larger than recent weeks) 3.00-5.00 lower at 150.00, nearly 25.00 off the record high posted last fall. Boxed beef cut-out values steadily advanced and have stabilized with Choice boxes gaining 5.00 for the week at just over 250.00. The year-to-date cattle slaughter is now down 7.4% while heavier weights have beef production down 5.1%, as pork production so far this calendar year is up 6.2%. August CME Live Cattle contracts are catching up to June, while October through April are trading at a premium to current prices.

Source:  Corbitt Wall, DV Auction

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