Agricultural News
Market Update with Paul Dykstra, Certified Angus Beef
Thu, 14 Apr 2022 09:29:39 CDT
Another sideways price pattern developed last week in the cash fed cattle trade as the market average came in again near $139/cwt. That marked five weeks with an average between $138 and $139/cwt. following a downward adjustment from $143/cwt. for the week of February 28. Looking at the current week, packer bids on Tuesday were consistent with last week's average.
As we near the middle of April, cattle feeders feel a spike in fed cattle prices is due immediately - if it's to happen at all. This comes as feedyards are transitioning from long yearling finished cattle to spring-born calf-feds.
This period is typified by a brief supply gap incentivizing a price spike as packers compete for fewer pens that have seen enough days on feed to hit premium quality grade targets. The USDA data indicates that larger than normal feedlot placements in the fourth quarter, forced by dry conditions, will push more finished cattle toward feedlot show lists beginning in May. Should that condition develop, then feedlot pricing leverage will weaken.
Last week's federally inspected cattle slaughter was adjusted down from 679,000 to 671,000 after revising the Saturday headcount estimate. Regardless, the revised number is very respectable, matching the total from the week of February 12, the only other week with such a large sum this year.
It's important to note that cull cow slaughter continues to run much higher than last year. A closer look shows cull cows were up an enormous 16.7% over a year ago in last week's total, whereas fed steers and heifers were just 1.3% higher. Weekday fed cattle headcounts ranged from 94,000 to 97,000 last week except for Friday's 91,000 total.
Carcass cutout values are performing within the seasonal trend with the spring buying upswing pushing prices higher. Comparisons to the 2020 and 2021 markets require caution when it comes to beef cuts since beef price increases jumped well beyond trends in the years immediately preceding. However, year to date 2022 comprehensive beef cutout values have outpaced the same period in 2021 by 19%. As a result, a significant seasonal demand factor points toward cutout values continuing to perform at a higher level into May. The confounding factor continues to be U.S. economic inflation and the consumer response in terms of volume that the market can absorb domestically.
From Certified Angus Beef--Paul Dykstra
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