Peel Analyzes Summer Cattle Market ConditionsMon, 23 Jun 2014 10:40:37 CDT
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist, writes in the latest Cow/Calf Corner newsletter
Summer officially started this past weekend and cattle markets so far have shown little of the seasonal pressure that has been expected. Fed cattle prices have strengthened counter-seasonally the past three weeks and cattle slaughter has continued down year over year. Feedlot marketings are expected to increase in June but the sharp spike in feedlot supplies that was implied by earlier placements may not materialize that way. Strong fed markets in May likely pulled some cattle forward while others may get pushed into July thereby smoothing out the June peak. June marketings will increase and fed prices will likely drop back but perhaps with less pressure than earlier anticipated.
The June Cattle on Feed report showed May marketings down four percent but, with one less business day this year, daily average marketings were equal to one year ago. May placements were down seven percent, as expected, leading to a June 1 on-feed total down 2 percent from last year. Placements of cattle under 700 pounds was actually up nearly three percent compared to last year (including a ten percent increase in placements under 600 pounds). At the same time, placements of cattle over 700 pounds were down 12 percent indicating that feedlot supplies will tighten significantly into the fourth quarter of the year. May feedlot placements were heavily oriented to the Southern Plains with year over year increases in Texas and Kansas placements while Nebraska and Iowa placements were sharply lower than last year. This brings the June 1 Texas feedlot inventory above the Nebraska total for the first time since January.
More rain fell across most of western Oklahoma this past weekend continuing a steady pattern of rain since Memorial Day. Most all of Oklahoma has had rain with totals ranging from about 3 inches to over 10 inches in some locations. Much of the state has received more than 100 percent of normal rainfall in the past thirty days which begins to whittle away at the rainfall deficit from earlier in the year. The lack of deep moisture means that drought conditions still exist and could redevelop rather quickly if rainfall is interrupted. Summer heat and wind will make it difficult to recharge subsoil moisture. Meanwhile, forage has responded dramatically to recent moisture and current conditions are better than indicated by the drought map. Though starting late, enough pasture and hay production is underway to meet summer needs in most cases.
Feeder prices in Oklahoma have continued to edge higher but may be near a peak. In this last week’s Oklahoma 7-market average, all Medium and Large, Number 1 steers less than 850 pounds were priced at over $200/cwt. The value of added weight gain on feeder cattle has increased in recent weeks as heavy feeder prices have increased more than lightweight feeder prices. Cull cow prices have remained strong as well with no seasonal decrease yet. Average dressing boning cow prices were $110.50/cwt this past week. Prices for bred cows continue to strengthen with young to middle-age bred cows trading mostly in a range from $1500-$2300/head, depending on quality.
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