Cattle Prices Perk Up by Wes Ishmael Beef demand will say much about prices the rest of the year .
Cattle markets the first part of August remained skewed , tough
to decipher and hard to trust . They felt firmer and more familiar , though .
For starters , cash fed cattle prices and wholesale beef values appeared to be past the bottom , thanks to packing capacity returning to prepandemic levels sooner than many thought possible .
For perspective , the likely ebb in beef production was the week ending May 2 , when total cattle slaughter was 438,614 head , according to USDA ’ s Actual Slaughter Under Federal Inspection report . That was 233,926 head fewer ( -34.8 %) than the same week in 2019 . Total fed cattle slaughter that week of 318,207 head was 223,325 head fewer ( -41.2 %) than the previous year .
By the week ending July 18 , total fed cattle slaughter of 520,206 head was just 4,429 fewer than the same week a year earlier . Beef production for the same week was 1.6 % more year over year , as the backlog of fed cattle lifted carcass weights significantly higher .
Increased beef production weighed on fed cattle prices .
“ The June price for fed steers marketed for slaughter in the fivearea marketing region averaged $ 103.82 / cwt ., but prices ended the month at $ 96.21 , losing more than $ 16 from the first week of June ,” say analysts with USDA ’ s Economic Research Service ( ERS ), in the July Livestock , Dairy and Poultry Outlook ( LDPO ). “ With the expectation of steadying demand for slaughter cattle and a large number of marketready cattle in feedlots , price forecasts for both the third and fourth quarters were lowered by $ 4 to $ 100 and by $ 3 to $ 103.00 , respectively .”
There are still plenty of backlogged market-ready fed cattle to work through , but it appears progress is being made .
“ The calculated estimates of cattle on feed over 120 days are still very large compared to last year , but the difference has decreased by some 160,000 head since May ,” explained Derrell Peel , Extension livestock marketing specialist at Oklahoma City , in late July market comments . “ It appears that the backlog is decreasing but a sizable number of cattle remain to be cleaned up before feedlots will be current .”
Peel also points out feedlot placements were about 1 million head less year over year from January through April , which should offer a window for clearing the backlog in September and October , if it still exists .
Demand Increases for Feeder Cattle
Feeder cattle prices had some seasonal steam heading into August , boosted by the availability of yearlings coming off grass and what appeared to be quicker feedlot turnover .
The CME Feeder Cattle Index recovered to a high of $ 139.99 by the end of July . It began March at $ 134.00 and then sank as low as $ 114.23 in the middle of April .
By way of review , that index is a sevenday weighted average price of beef steers sold at auction or via direct trade and reported to USDA . It includes Medium and Large # 1 steers weighing 700-899 lbs . from 12 states .
Also by the end of July , price levels for Feeder Cattle futures were the highest since March and Cattle future price spreads across all months recovered to near pre-COVID-19
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