USDA report throws curveball to cattle market
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.
April has proved not all curve balls are limited to baseball season. The USDA Cattle on Feed Report released showed the April 1 on feed number of 12.1, nearly 2 percent higher than a year ago and the highest April 1 inventory since the report began in 1996.
The real shock came from the cattle placed into feedlots during March at 1.99 million head. While the number is 99.6 percent compared to a year ago, the average trade estimate was 91.7 percent, and the total is nearly 4 percent more than the highest pre-report estimates.
The high number of placements came at a time when many believed there weren’t many feeder cattle available outside of feed yards. Live Cattle futures were sharply lower Monday in reaction to the report with April Live Cattle contract now running at a discount to cash.
Feeder cattle contracts also saw red based mostly on higher corn futures. A larger number of fed cattle will begin hitting the market in two to three weeks, and the latest Cattle on Feed report indicates that the increased supply will run through the summer and at least into early fall.
The USDA also released a Monthly Slaughter report last week. Cow harvest for the first quarter of the year was 141,000 head more than the same period last year. The U.S. cow herd is shrinking, and with heifers making up about 37 percent of cattle on feed, the cattle sector as a whole isn’t keeping enough heifers for replacement to even accommodate typical culling levels.
Estimated harvest last week was 665,000 head, 31,000 head more than the previous week and about even with a year ago. This week’s harvest is progressing at a strong pace. The Choice carcass cutout value lost $2.50 to end last week at $272.36. Loins performed well, but chucks, rounds and briskets lost value.
Rabobank lowers '22 U.S. hog production growth estimate
Rabobank has lowered its 2022 US hog production growth estimate from -0.4 percent to -2.8 percent. A smaller breeding herd along with uncertainty in export demand and anticipated costs associated with meeting sow housing regulations later this year are cited by Rabobank.
Consumer demand is firm with retail prices about 3 percent lower than a year ago, but 32 percent higher than the five-year average.
Pork production in March was down 3.6 percent and is 5.3 percent behind year-to date. Harvest measured by head is 5.4 percent below 2021. Last week’s estimated harvest of 2.374 hogs was 33,000 head higher than the previous week and 97,000 less than the same week last year.
The pork cutout value gained $1.30 last week and finished Friday at $111.28. Pork exports are lower than a year ago, 15.7 percent by volume and 13.7 percent in value.
Exports to China are down 56 percent year-to-date although sales to Mexico are up 38 percent. The latest weekly export report showed a sharp increase over the previous week at 31,500 metric tons with 21,600 metric tons of the total purchased by Mexico.
Cold storage report
The USDA Cold Storage report last week showed total red meat supplies in freezers were up 1 percent from the previous month and up 9 percent from last year. Total pounds of beef in freezers were up 1 percent from the previous month and up 11 percent from last year. Frozen pork supplies were up 2 percent from the previous month and up 8 percent from last year.
WI livestock market roundup
Choice beef breed steers and heifers at Wisconsin and surrounding state auction markets were higher. High-yielding, high-grading cattle brought $125.00 to 143.00/cwt. High Choice and Prime type cattle with an overnight stand at the auction market sold from $143.00 to $147.00/cwt.
Choice and Prime Holstein steers were mostly steady to higher at $94.00 to $126.00/cwt. with reports of some high yielding steers selling to $130.00/cwt and a few packages higher. Silage fed, under finished or heavy dairy breed steers brought $72.00 to $94.00/cwt.
Dairy x Beef steers were mostly $100.00 to $136.00/cwt. Cows were $1.00 to $2.00 lower at $55.00 to $79.00/cwt. Beef breed cows in fleshier condition sold into the mid $80.00s/cwt. Doubtful health and thin cows were bringing $55.00/cwt and down.
Dairy breed bull calves were lower, bringing $50.00 to $135.00/head with heavier, well cared for calves up to $190.00/head. Beef and Beef Cross calves were lower bringing up to $370.00/head with some selling above. Market lambs were bringing up to $255.00/cwt.