Firm tone in the cattle market remains even as wholesale prices decline
Prepared and written by Jeff Swenson, DATCP Livestock and Meat Specialist. The Market Update draws information from several sources, including trade publications, radio broadcasts, agricultural news services, individuals involved in the industry as well as USDA NASS and AMS reports.
Last week’s cash cattle trade was called steady for the tenth week in a row, although there was a higher trend at Wisconsin auction markets. Cash trade developed early this week with fed cattle higher. There is a firm tone in the cattle market even as wholesale prices decline.
Beef prices typically trend lower the second half of June and it’s usually expected that muscle cut prices back off as we head into the historically hottest part of summer.
Wholesale beef prices were lower multiple days in a row since last Friday. It’s been predicted for months the supply of fed cattle would tighten during the second half of 2021, and nothing has happened to change that forecast.
Lower grain futures contracts and lower cash grain bids are lending cautious optimism to the cattle sector. Lower grain futures prices have spurred the Feeder Cattle contracts higher this week.
Feeder cattle at auction sold $3.00 to $5.00 higher across the country last week. Packers were successful at putting together a larger harvest last week at 665,000 head; 127,000 head more than the holiday shortened week prior. It’s anticipated harvest this week will be a similar run.
Hog futures show weakness
The pork complex has been charging forward for so long it caught many off guard when the brakes were put on this week. The cutout value worked lower and Lean Hog futures contracts showed weakness. It’s too early to tell if this is a temporary situation or we have seen the summer highs.
Hog supply is still tight enough for cash hog bids to continue higher this week. In the longer term, it’s unlikely we’ll see expansion and herd growth in the pork sector. The sow population is struggling with PRRS variants on top of relatively high culling rates.
Jim Long, President and CEO of Genesus Inc. reports that packers are unable to find enough employees to maximize carcass value. If money is left on the table during processing it’s taken out of the price farmers are paid for their hogs.
Last week’s estimated harvest of 2.440 million head was 465,000 more than the previous week which included a holiday.
Traders eye weather forecast
Traders are keeping an eye on weather forecasts. Grain futures traded sharply lower this week based not so much on current dry conditions, but on an extended forecast calling for precipitation in major crop-growing regions.
Farmers in many parts of Wisconsin are hoping for some much needed precipitation. Wisconsin’s corn crop is rated as 71 percent Good to Excellent. That’s a drop of 5 percent from the week prior. The US corn crop as a whole is rated 68 percent Good to Excellent.
Wisconsin’s soybean condition dropped 7 percentage points from the previous week and is rated 65 percent Good to Excellent. That compares to the national rating of 62 percent.
Just 35 percent of the nation’s pastures are rated Good to Excellent while conditions in Wisconsin dropped 10 points to 58 percent Good to Excellent. The first cutting of alfalfa hay in Wisconsin is reported 87% complete, 6 days ahead of last year and 8 days ahead of the average. All hay condition was rated 63% good to excellent, 7 percentage points below last week.
State markets remain steady
Choice beef breed steers and heifers at Wisconsin and surrounding state auction markets were steady. High-yielding, high-grading cattle brought 105.00 to 121.00/cwt. with groups bringing $120.00 $126.00/cwt.
Choice and Prime Holstein steers were higher bringing $98.00 to $110.00/cwt. There were some packages of Holstein steers selling to $118.00/cwt. Silage fed, under finished or heavy dairy breed steers brought $70.00 to $98.00/cwt. Dairy x Beef steers were mostly $85.00 to $116.00/cwt.
Cows were steady to $2.00 lower at $45.00 to $67.00/cwt. Blemish free cows in fleshier condition were selling to $77.00/cwt. Doubtful health and thin cows were bringing $48.00/cwt and down.
Dairy breed bull calves were lower at $40.00 to $70.00/cwt with heavier, well cared for calves up to $140.00/cwt. Beef and Beef Cross calves brought up to $330.00/cwt. Feeder cattle were higher at special auctions this week. New crop fed lambs sold up to $275.00/cwt.