Cash cattle moved lower this week after holding mostly steady the past few weeks. Seasonally this is not uncommon as prices typically decline into the heat of the summer. Live cattle in Texas and Kansas were at $114-$115/cwt. In Nebraka, live and dressed trade was called at $115/cwt and $181-$183/cwt, respectively. In Oklahoma City, feeder steers and heifers were $2-$6/cwt lower compared to two weeks ago, with 600 pound cattle as much as $10/cwt lower. Calves in OKC were $10-$20/cwt lower than two weeks ago. Mississippi feeders were $10-$15/cwt lower than two weeks ago. Slaughter cows and bulls in Mississippi were $1-$3/cwt and $3-$8/cwt lower, respectively.
The month of July has not been kind to live cattle futures. After falling early during June, futures rebounded and ended the month about even with how it started. July has a similar pattern developing. Nearby contracts have been hit harder than more distant months. Lower cash and beef prices pressured throughout the week. Further,the drying pastures across much of the U.S. are slowly forcing cattle to market sooner than desired. This is similar to the events of last year with the exception that this year’s drought covers many more acres (click these graphics comparing last year’s drought to this year’s). Producers in the Southern Plains liquidated last year but operations outside this region are beginning to thin herds and sell calves early. This current -and expected future- bump in supply is pressuring remaining 2012 contracts. This along with sharply higher corn prices did a number of feeder cattle futures.
In the words of the late Harry Caray, “It might be!…It could be!…It is a [small corn crop]…Holy Cow!” Corn spelled backwards is nroc, and that is what happened, the market got nROC(k)’ed with the news of a 20 bushel per acre drop in expected yield. That about sums up the reaction to Wednesday’s World Agricultural Supply and Demand Estimates (WASDE) report from the World Agricultural Outlook Board. The report revealed a reduction of of 1.82 billion bushels of corn from the 2012/13 supply. This sent markets skyrocketing early Wednesday before cooling off and closing lower – resulting in a very wide trading range on that day. For a more detailed discussion of the July WASDE click here. Still, prices moved higher on the week as the crop is in trouble from the dry, hot weather.
Wholesale beef prices moved lower this week. Choice wholesale beef finished much lower than last week with a weekly average of $187.33/cwt, down $6.19. Select ended the week at $173.81/cwt, down $2.57. This narrowed the spread between Choice and Select to $13.52/cwt compared to $17.14 last week.