Agricultural News
Cattle, Beef Markets Trend Lower on Backside of Spring Peaks, Dragged Lower by Weak Demand
Mon, 13 May 2019 12:00:04 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 takes a post-seasonal peak look at beef and cattle markets. According to Peel, markets are starting to trend lower now on the heels of the spring peak in beef and cattle prices while also reflecting weakness in the export business as reported in the latest trade data.
"Fed cattle prices matched March seasonal peaks with another peak in late April but appear to be declining seasonally now. From the April peak just over $128/cwt., fed cattle prices this past week dropped to around $120/cwt., the lowest fed prices since last December. Choice boxed beef price peaked in late April at just over $233/cwt. and have since decreased $10/cwt. in the past two weeks.
"The early round of summer grilling wholesale purchases for Memorial Day are past and middle meat prices are steady to weak with an apparent early first seasonal peak for some cuts, especially ribeyes. This may reflect widespread wet, cold weather across much of the country that is delaying summer beef demand. Boxed beef cutout values will likely strengthen again with July 4 buying commencing in middle to late May. Warmer summer weather should also boost beef demand seasonally in the coming weeks.
"Part of the weakness in boxed beef prices is due to weaker end meat prices in the chuck and round. While end meat prices are typically weaker in the summer, current weakness, especially for chuck products may additionally reflect weaker export demand so far in 2019. Latest trade data for March show beef exports down 5.7 percent year over year, with reduced exports to Japan, Canada and Hong Kong while South Korea and Mexico continue to be growing markets for U.S. beef. For the first quarter, total beef exports were down 4.7 percent from one year ago. Growth in beef exports the past three years has been especially strong for products from the chuck. Current forecasts are for total beef exports in 2019 to be quite close to 2018 levels, barring any major changes in global trade policies.
"Also in the latest trade data, beef imports were up in March by 6.3 percent year over year leading to first quarter beef imports up 2.3 percent thus far in 2019. Beef imports are up for major import sources including Canada, Australia and Mexico but are down sharply from New Zealand. Total beef imports in 2019 are currently projected to hold close to year earlier levels.
"Beef production thus far in 2019 is up less than one percent as cattle slaughter, up 1.3 percent for the year to date, is partially offset by lighter average carcass weights. Steer and heifer carcass weights are declining seasonally but latest weekly carcass weights for both steers and heifers are above year ago levels.
"Calf and stocker prices have dropped significantly after peaking in April. While good moisture conditions implies good forage prospects this summer, cooler than normal weather has delayed pasture growth. Calf prices generally decline from first quarter peaks to seasonal lows in the fall. Heavy feeder cattle prices, which seasonally grind higher from now until late summer, have also dropped recently. I suspect this is largely due to delayed feedlot marketings resulting from earlier winter weather combined with continuing wet, sloppy feedlot conditions. Heavy feeder prices will likely get back on seasonal track as feedlots catch up from earlier delays and feedlot pen conditions improve in the next few weeks."
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