Cattle Market Notes: Week Ending May 10, 2013


Cash Cattle:

The five-area cash price ended the week at $126.22/cwt on a live basis, a drop from last Friday’s $129.02. In both Texas and Kansas, live cattle traded at $126/cwt on Wednesday. In Nebraska, live sales were at $126-$126.50/cwt on Thursday, while dressed sales were at $202/cwt Friday. In the Western Cornbelt, live sales were reported at $127/cwt and dressed cattle traded at $203-$204/cwt on Thursday.

In Oklahoma City, heavy feeder steers were $2-$4/cwt lower, while lighter feeder steers were called steady. Feeder heifers in OKC were $2-$4/cwt lower. In Mississippi auction markets, steer calves were steady, heifer calves were about $1/cwt lower, feeder steers were $1-$3/cwt lower, and feeder heifers were mixed. Slaughter cows were $1-$2/cwt higher, while bulls were mostly steady.

Futures:

Live cattle futures finished lower on the week. Prices slid through Wednesday with little in the way of bullish news adding support. The futures market is currently at a significant discount to current cash prices, which has traders slightly concerned. However, the summer lull is approaching and the export market remains weak (exports are off 9.7% from last year’s pace). These along with depressed consumption has the bears winning more days than bulls. To close the week, USDA released their monthly supply/demand report. The report projects 2013 beef production higher at 25.1 billion pounds, while consumption was raised to 56.1 pounds per person (largely a necessary result to absorb the higher production). The initial forecast of 2014 production was 24.1 billion pounds, much lower compared to 2013 due to the shrinking herd.

Corn futures finished the week lower. The market was choppy during the week, leading up to the release of the USDA supply/demand report, which is common, but more so this month with the first projections for the new crop coming out. Early week pressure was seen as improved weather allowed for some ground to be covered with planters. On Friday, USDA’s projection for 2013’s corn crop currently sits at 158 bushels per acre yield and 14.14 billion bushels of production (if we make that projection it will be a record). Feed and ethanol use are higher than previous years due to lower expected prices.

Beef:

Wholesale boxed beef prices continued to move higher this week, with Choice carcasses taking a hefty jump on Wednesday. Choice finished with a weekly average of $203.32/cwt, up $4.73, and Select finished at $190.50/cwt, up $1.58. The difference between Choice and Select has increased from $0.39/cwt in mid-March to $12.77 this week.

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