The fed-cattle market was slow to develop last week, with the few sales reported late in the holiday-shortened week showing prices steady to slightly higher. The Texas Cattle Feeders Association reported no sales as of 5 pm on Thursday, July 2. USDA’s Five Area Weighted Direct Slaughter report, also on July 2, showed light sales with cattle averaging $80 to $83 per hundredweight on a live basis and $128 to $132 per hundredweight in dressed markets. Wholesale beef prices lost some ground, with the Choice cutout finishing the week at about $138 and the Choice-Select spread averaging about $5.50.
The big news last week came in the form of the USDA acreage report, which surprised the markets with its estimate of more than 87 million acres planted to corn, an increase of 2 million acres since the last estimate in May, before planting finished. Prior to the report, analyst predictions for planted corn acreage ranged from 82.5 to 66 million acres, as most expected weather-related delays in planting to shift significant acreage away from corn and into soybeans. So USDA’s corn-acreage estimate exceeded even the highest guesses and is about a million acres more than last year. With about 70 percent of the crop currently rated in good to excellent condition, farmers are on track to produce the second-largest corn crop in history. USDA also reported quarterly corn stocks higher than most analysts expected, at 4.266 billion bushels, as demand for exports and feed use decline.
Corn futures were limit-down last Tuesday, and have continued to decline since. Lower corn prices could allow some profitability to return to the feeding sector, especially if fed-cattle prices gain ground in the second half of this year as expected. Feedlots undoubtedly will try to hold the line on cattle they purchase, but lower corn prices should be supportive to calf and yearling prices as we approach the fall marketing season.
Read USDA’s Five-Area Slaughter report.