In The Cattle Markets

Authors:

David P Anderson, Ph.D

Texas A&M

 

Brenda Boetel, Ph.D.

University of Wisconsin

 

Elliot Dennis,

University of Nebraska - Lincoln

 

Matthew Diersen, Ph.D

South Dakota State University

 

Stephen Koontz, Ph.D.

Colorado State University

 

Josh Maples, Ph.D

Mississippi State University

 

March 30, 2020

In The Cattle Markets

David P. Anderson, Professor and Extension Economist

Texas A&M AgriLife Extension Service

 

Lots of Supplies Amid Market Turmoil

Cattle and calf prices, futures markets, cutout prices, and provide many great topics for discussion.  This week we’ll focus on beef supplies.  It just so happens that in today’s volatile market large amounts of beef (and pork and poultry) are available.

 

With just 2 days left in the first quarter of 2020, fed steer and heifer slaughter is up 5.4 percent over last year.  Cow and bull slaughter is up 4.5 percent over last year.  Steer dressed weights are 22.5 pounds greater than in the first quarter last year, while heifer average weights are 13.7 pounds heavier.  Cow weights are up 2.6 pounds.  Saturday slaughter rates have jumped dramatically as packers work through these large supplies of cattle offered.  The last Saturday of March had an estimated 75,000 head slaughtered compared to 34,000 the same weekend the year before and only 14,000 on average over the last five years.  The combination of increased slaughter and weights leaves total beef production up 6.7 percent in the first quarter (with a couple days left). 

 

Beyond live cattle slaughtered, loads of wholesale beef are purchased and moved every day.  March 16th saw 194.75 loads (7.79 million pounds) of Choice beef cuts move.  That was the largest volume day since September, 2011, right before 9/11.  Clearly, grocery stores jumping into the market to refill their pipelines and shelves led to large beef movement.  Coarse grinds on March 23rd, 44.4 loads, were the largest movement since November, 2017. 

 

A lot more market volatility is likely to come as the effects of covid-19 ripple through our economy.  While we come to grips with all the demand implications it’s worth recognizing that it is occurring in the time of cyclically peak beef supplies.

 

The Markets

Fed cattle prices jumped some $10 per cwt over the previous week, as wholesale beef market demands reached into live markets.  Calf and feeder markets also increased, re-capturing lost ground from the week before.  Cull cow prices continued to rise in many local markets.  The boxed cow-beef cutout jumped by $5 per cwt.  Expectations of increasing ground beef demand as the economy struggles is pulling 90% lean beef prices higher.  The daily Choice cutout increased about $5 per cwt from its peak at $257 as the week went on.  By Friday, the Choice-Select spread stood at about $10 per cwt. 

Data Source: USDA-AMS Market News

 

Week of
3/27/20

Week of
3/20/20

Week of
3/29/19

5-Area Fed Steer

all grades, live weight, $/cwt
all grades, dressed weight, $/cwt

$119.31
$188.88

$109.89
$173.13

$126.34
$205.6

Boxed Beef

Choice Price, 600-900 lb., $/cwt
Choice-Select Spread, $/cwt

$255.07
$11.42

$243.03
$9.88

$228.2
$8.86

700-800 lb. Feeder Steer

Montana 3-market, $/cwt
Nebraska 7-market, $/cwt
Oklahoma 8-market, $/cwt

$--
$143.43
$134.35

$126.71
$136.69
$119.39

$148.67
$153.57
$144.72

500-600 lb. Feeder Steer

Montana 3-market, $/cwt
Nebraska 7-market, $/cwt
Oklahoma 8-market, $/cwt

$175.05
$164.11
$161.56

$171.1
$168.68
$146.68

$181.89
$191.58
$177.05

Feed Grains

Corn, Omaha, NE, $/bu (Thursday)
DDGS, Nebraska, $/ton

$3.24
$175.3

$3.26
$148.69

$3.64
$161.5