Cash cattle in the Souther Plains (Texas, Oklahoma, and SW Kansas) were at $128/cwt on a live basis as of Wednesday. In Nebraska, live and dressed sales were at $129/cwt and $204-$205/cwt, respectively, on Wednesday as well. Western Cornbelt cattle were at $128-$129/cwt live and $204-$205/cwt on Thursday. Cattle were mostly steady with last week’s trade and, collectively, the five-area live price finished the week at $128.29, up $0.53 versus last week.
Cash feeders and calves benefitted from last week’s bearish report for corn. In Oklahoma City, feeder steers under 850 pounds were $3-$6/cwt (those over 850 were $1-$3/cwt higher) and feeder heifers were $4-$8/cwt higher. Calves were $2-$4/cwt higher in OKC. In Mississippi auction markets feeder steers and heifers were $5-$10/cwt higher, while cull cows and bulls were steady.
Despite the exceptionally bearish Grain Stocks report from last Thursday (link to my recap) live cattle futures managed to finish in the red this week. Keep in mind prices gained about $3/cwt in the final two trading days last week (markets were closed last Friday) and therefore this week is being compared to a recent high water mark. Still, it speaks to the struggles within the industry since the first of the year. Mother nature seems to really have it out for beef producers. First, a massive drought minimizes the nation’s corn crop. Then a hurricane AND a snowstorm hits one of the largest populated areas in the U.S within a few months of each other. Finally, cold weather seems to be lingering around when many would be out grilling. Thus, the drop in prices this week appears to be linked to concerns about beef consumption in the short term. Friday’s weakness is the result of a very poor jobs report showing only 88,000 jobs added in March (well below the most pessimistic forecast) and could be the start of more pressure linked to sluggish beef demand.
Corn futures finished lower this week but appear to have leveled out from the sharp drop following last week’s bearish stocks report number. The market was caught off guard by the exceptionally high volume of corn in storage across the U.S. Many (myself included) point to the lower ethanol production. During the December through February time frame covered by the stocks report ethanol production was down 13% compared to the previous year. There is no doubt that refiners were sitting on the sideline – cashing in blend credits referred to as RINs – while corn prices skyrocketed. Another reason linked to the low corn stocks number is the increased use of beta-agonist in cattle feeding. These additives increase feeding efficiency and decrease the amount of corn needed to bring cattle to heavier weights. Higher dressed weights have been well documented and this (along with a milder than normal winter) are the likely reason. High priced corn makes these additives a more economical decision for cattle feeders.
Wholesale boxed beef prices were mixed this week. After narrowing to a razor thin $0.39/cwt two weeks ago, the spread between Choice and Select carcasses increased to $3.01/cwt with Choice increasing and Select dropping. Choice finished with a weekly average of $191.29/cwt, up $1.48, and Select finished at $188.28/cwt, down $0.74.