Agricultural News
Market Update from Paul Dykstra with Certified Angus Beef
Thu, 31 Mar 2022 10:47:59 CDT
The fed cattle market was unchanged last week with little news to stir prices higher. The choppy Live Cattle futures prices were also uninspiring in terms of influencing market sentiment any higher. Early week cash prices in the $140/cwt. range were promising, but at the conclusion of trade Friday, the weekly average was essentially stagnant at $139/cwt.
The redundancy of higher corn prices in the market discussion is bound to grow old, but it's an important feature of the fed cattle trade now and will be moving forward. Cattle feeders have been more willing to sell finished cattle in recent weeks since corn prices have elevated the ration cost and feed conversion efficiency decreases at the end of the feeding period.
With the spring season now underway, cattle feeders anticipate a spike in the fed cattle price. Recent historic data is of little help in gauging potential timing for the spring market high, given the pandemic disruption. However, the 10-year average data shows that April prices have failed to outperform March prices. Despite healthy fundamentals, it appears that the market will struggle to generate a big spike in the month ahead, barring outside disruption.
The boxed beef trade in March is shaping up to be a more traditional spring market trend. Carcass cutout values found a more acceptable range in March, hitting a Choice cutout low of $255/cwt. early in the month, after a sustained retreat from the $284/cwt. spike in January. In a similar fashion, the January CAB cutout peak of $303/cwt. declined to the early March low of $270/cwt.
Spring beef demand is beginning to swell as each of the cutout prices rise higher the closer we get to April. The Choice cutout is up roughly $5/cwt. in a matter of two weeks and the CAB brand cutout value is up $9/cwt.
As to the price spreads for quality, those are widening as predicted. In the past two weeks, Urner Barry's Choice/Select spread has increased by $6.89/cwt. from its expected seasonal low. The CAB/Choice spread found its winter low of $12.42/cwt. the second week of February, now it's expanded to $18.75/cwt.
Article courtesy of Paul Dykstra with Certified Angus beef
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