Cattle Market Notes: Crude Oil Prices To Keep Corn Afloat; Beef Flat

With little positive news regarding price, especially early in the week, very little trade was seen across all cattle feeding regions. Trade was at a standstill in the Southern Plains. Trade was so light that not enough cattle moved to establish a trend, but if one had to be called it would be steady. The best established price is last week’s $82 live price. Coming off a bullish, though within pre-report expectations, Cattle on Feed report coupled with a light week of trade these past two weeks, cattle will likely start moving this coming week. Cattle slaughter for this past week was: 672,000 head compared to 662,000 last week and 694,000 head a year ago.  Year-to-date cattle slaughter is down 5.4% from last year. 

Feeder cattle markets were mostly higher this week, especially sales later in the week. At Oklahoma City, feeder steers were steady to $2 higher; feeder heifers, $1 to $3 higher.  Stocker steers and heifers not well tested.  In Lexington, KY, feeder steers and heifers were steady to $1 higher.  Steer calves steady to firm; heifer calves were steady to $1 higher.  In West Plains, MO, trade was choppy and mostly lower. Steers under 500 pounds were $3 to $8 lower; heifers under 500 pounds were steady to $3 lower. In Arkansas, prices on feeder steers were mostly steady to lower while heifers were $1 to $3 higher. In Georgia, feeder steers and heifers were steady; steer and heifer calves were steady to $1 lower.

At Mississippi auctions this week lighter weight calves appeared to be steady and heavier cattle were mostly lower. Price for steers (medium and large, 1-2) in Mississippi auctions throughout the week were as follows: 200-300 pounds, $120-$134; 300-350 pounds, $115-$125; 350-400 pounds $105-$115; 400-500 pounds $95-$105; 500-600 pounds $90-$100; 600-700 pounds $85-$96; 700-800 pounds, $80-$90. Slaughter cows were $2 to $6 lower this week. For the week cows brought $37-$44 for boning cows (850-1,200 lbs) and $32-$40 for lean (850-1,200 lbs).

All agricultural commodity futures started the week on a down note following a strengthing of the US dollar along with a down day, or two, on Wall Street. With Wednesday came brighter pastures as prices began to climb, a little. Some positioning prior to the COF report likely took place as estimates were made public on Wednesday and those estimates were rather bullish. Still, the good news is that the front month (June) contract closed the week starting with an eight again after dipping below that in early week trade. Live Cattle futures closing prices on this Friday (with change from last week’s close in parentheses) were as follows: June $80.93 (+0.45), August $82.13 (+0.53); October $87.75 (+0.65); December $88.88 (+0.06); February $90.10 (-0.17); April $91.45 (-0.75).

Feeder futures slid lower for the first part of the week, following all other commodities. By mid week corn futures had taken a pretty good hit adding some positive news in the feeder cattle pits.  All contracts through 2009 were mostly steady with last Friday’s close. Feeder Cattle futures closing prices on Friday (with change from last week’s close in parentheses) were as follows: August $98.10 (+0.48); September $98.25 (+0.68); October $98.40 (-0.22); November $98.60 (+0.28); January $97.70 (-0.30).

Corn futures took quite a hit on Monday and nothing really came forward that gave the market any reason to change that course other than higher crude oil prices.  This marks two weeks in a row where corn futures finished the week with drastic losses. A strengthening US dollar was bad news for exports and improving weather conditions in the Corn Belt did little to provide strength to corn prices. Higher crude prices will likely keep corn prices afloat until USDA’s June 30 acreage report. July corn ended the week at $3.99 ¼, down 26 ¼ cents over last week.  The harvest time price of the September contract closed at $4.07 ¼ on Friday, down 27 ¼ cents.

For the second week in a row wholesale beef prices moved a little higher for the first part of the week before starting back down to finish the week about where they started. The spread between Choice carcasses and Select Carcasses has been working higher since we saw it dip into negative territory the first week of April (see chart below). At first glance one would chalk that up to the summer demand for higher value cuts for the grill. Unfortunately, when you look at wholesale prices over this period you see that both Choice and Select have been drifting lower with Select decreasing a little faster than Choice to make the spread widen. The Choice cutout worked out to $140 in Friday afternoon’s report, up 22 cents from a week ago.  The Select cutout stood at $132.98 on Friday afternoon, up 13 cents from a week ago. 

As noted above, the monthly Cattle on Feed report was released this afternoon by USDA. The report was rather bullish with all categories coming in below year ago levels. Cattle on feed June 1^st was at 10,407 head, down 4% from 2008. Placements during May were down 16% from a year ago. Still, these values were close to the pre-report expectations and definitely within the range. A summary of the report and the trade projections are below.