Weather continues to impact the cattle sector
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.
Weather continues to impact the cattle sector. The Midwest and parts of the Great Plains are dealing with mud as warmer temperatures move in after cold and snow. There are already reports of fed cattle coming to market carrying some mud.
Packers in Colorado are dealing with inclement weather that may hamper production. Parts of the country with high cattle populations are dealing with dry conditions that could lead to more beef cows heading to market if the situation doesn’t change soon.
Cash cattle prices need a kick in the pants if they are going to work higher in the next couple of weeks. Domestic demand is good, and the weekly export data indicates 20,900 metric tons of beef was sold to foreign buyers. This is offset by a continued large supply of cattle to work through this spring with numbers likely spiking in April and May. The USDA estimated last week’s harvest at 665,000 head.
Average carcass weights for beef breed steers last week were 868 pounds, and that is five pounds lighter than the previous week and nearing year ago levels. The best bet for higher cattle prices will be continued reduction in carcass weights and a tighter supply of cattle (likely to occur in the second half of 2021.) An increase in food service demand and spring grilling would definitely help as supply grows.
Hog prices move higher
A fire was lit under the cash hog market with pricing continuing to move higher. This is at least the fourth week of higher cash prices. Cash hogs on a carcass price basis were $65.38/cwt on Friday, February 12 and $86.45/cwt on March 10.
Hog harvest last week was estimated at 2.563 million head. It seems both harvest numbers and hog weights are moderating after almost a year of working through COVID 19 supply chain issues. The latest breakeven calculation from the Sterling Profit Tracker I found is two weeks old, and that indicated farrow to finish farms were $30.00 per head in the black. Cash prices have gone up since then.
Export sales for the week were 32,400 metric tons with 10,700 metric tons going to China and 6,900 metric tons to Mexico.
Unemployment rate down
The US added 379,000 jobs in February. The Unemployment rate was down as well at 6.2 percent. The latest restaurant performance index was 99.1 – an index above 100 would indicate growth. While the number is sub 100, it does signify improvement.
The concept of pent-up demand is being talked about a lot. There is a large segment of Americans looking forward to eating out and travelling. Those things tend to favor red meat.
Consumer confidence and having money to spend enter into the equation, too. If carcass weights come in line with year ago levels on all species as grilling season approaches and livestock supplies tighten, the red meat complex could find plenty of upside.
Added demand from food service and more Americans heading back to work are worth tracking and will likely boost meat sales. That’s a lot of planets needing to align, but it would be welcomed at the farm level as feed costs continue to increase.
State auction prices
Choice beef breed steers and heifers at Wisconsin and surrounding state auction markets were steady to $1.00 lower. High-yielding, high-grading cattle brought 92.00 to 111.00/cwt. There were reports of some selling above $113.00/cwt.
Choice and Prime Holstein steers were bringing $88.00 to $96.00/cwt. There were several reports of high-yielding, calf-fed, Holstein steers with an overnight stand selling at $97.00/cwt and above.
Silage fed, under finished or heavy dairy breed steers brought $70.00 to $90.00/cwt. Dairy x Beef steers were mostly $92.00 to $103.00/cwt.
Cows were $2.00 higher at $40.00 to $57.00/cwt. Blemish free cows in fleshier condition were selling in the high $60’s.
Dairy breed bull calves were mixed at $40.00 to $100.00/cwt with heavier, well cared for calves up to $155.00/cwt. Beef and Beef Cross calves brought up to $225.00/cwt.
Market lambs remain lightly tested. 110 to 140 pound lambs sold in a wide range, topping at $200.00/cwt for new crop lambs. Markets are reporting higher sow prices.
Feeder calves ready for grass are still in good demand. Markets are also reporting good demand for quality replacement dairy females. Pregnant beef cows are seeing strong demand as well.