Agricultural News
Smooth Sailing Ahead This May as Cattle, Beef Markets Remain in Most Stable Pattern Seen in Years
Mon, 29 Apr 2019 12:18:56 CDT
Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel looks at the planting intentions for major crops from a feed perspective and how these will impact demand dynamics in the cattle and beef markets in the month ahead.
"Does May bring flowers - or more showers? The question of whether April showers continue into May will become important in terms of crop production. The next few weeks will determine whether planting intentions for major crops will be realized. From a feed perspective, there appear to be ample supplies and production potential to maintain attractive concentrate feed prices for the foreseeable future.
"From a forage perspective, excellent moisture conditions suggest tremendous pasture and hay potential. The latest Drought Monitor shows the least amount of dry conditions across the country since the Drought Monitor began in 2000. The upcoming May Crop Production report from USDA-NASS will likely show that May 1 hay stocks are low following reduced December 1 hay stocks and cold, wet conditions affecting cattle production this past winter. However, good hay production prospects for 2019 alleviate much of the concern about end of crop year stock levels as the 2019 hay crop year begins.
"Beyond the weather, seasonal supply and demand conditions will influence cattle and beef markets in May. Beef production grows seasonally from April to June on the heels of seasonal peaks in steer slaughter in June. Total beef production actually peaks in October with seasonal peaks in heifer and cow slaughter added to steer slaughter. Steer and heifer carcass weights are approaching the seasonal low in May before climbing to a peak this fall. At this time, steer and heifer carcass weights are close to year ago levels after being lower for the year to date, largely as a result of weather impacts. Fed cattle prices are currently at or just past the seasonal peak this spring and typically decline to late summer lows.
"Boxed beef prices typically peak in May, driven by summer grilling demand. Rib and Loin primal prices are seasonally high at this time while Chuck and Round primal prices are seasonally soft in the summer before increasing in the fall. Beef exports in the coming months may impact these seasonal patterns, in particular to moderate the summer lows for Chuck product prices, which are seeing growing export demand.
"Prices for lightweight calves and stockers are likely at or just past the seasonal peak. Good but slow developing forage conditions this spring have spurred strong grazing demand and maintained calf prices near the seasonal peak through April. Prices for big feeder cattle typically increase from early spring lows and push steadily higher to late summer price peaks.
"Cull cow prices have been quite erratic this year, spiking up seasonally a couple of times but falling back each time reflecting variability in the ground beef market. The ground beef market has been quite dynamic for several months with changes in both supply and demand conditions.
"With the exception of the cull cow market, cattle and beef markets are behaving seasonally with little underlying trend in most markets. All in all, we are seeing the most stable cattle and beef markets in many years. Until or unless outside shocks rise up to impact supply or demand conditions, expect cattle and beef markets to remain pretty calm in the coming months."
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