Cash cattle, live cattle futures trend higher in recent weeks

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.

Cash cattle, Live Cattle futures, and boxed beef prices were all higher this week. Thursday’s beef cutout value was $270.50, and that is $17.65 higher than last Friday. Last week’s harvest was low at 609,000 head. Carcass weights averaged 10 pounds less than the previous week at 858 pounds. Live and carcass weight comparisons against last year will now have less meaning since cattle (and hog) weights began ballooning a year ago as harvest capacity was hampered by challenges brought on by COVID -19. The lower weekly harvest along with the lighter carcass weights indicate a tightening of fed cattle supplies. Higher cash cattle may be the proof.  Profitability is still a challenge for farmers. One source reported that when the cattle heading to market now were purchased, the calculated breakeven was $115.00/cwt. Because of the sharp increase in feed cost, those break evens today are estimated at $125.00/cwt in most parts of the country. Higher feed costs have shifted demand to heavier feeder cattle. The extra weight needs to be put on by someone, and that will impact the bottom line of cow calf producers or stockers/backgrounders.  The most recent weekly export sales data reports sales of 18,200 metric tons of US raised beef.  

Pork continues to be a bullish market.  Cash hogs on a live basis nationally were $76.41/cwt, and $99.41/cwt on a carcass basis.  There were reports of hogs trading as high as $102.00/cwt on a carcass basis.  The pork cutout value Thursday afternoon was $111.00 compared to 109.51 the end of last week. Harvest last week was estimated at 2.470 million hogs.  Like cattle, hog harvest numbers have been declining. Barrow and gilt carcass weights have been averaging 215 pounds.  Comparisons to 2020 weights from here on out will be impacted by the cloud of COVID-19 and the extra days on feed it caused. Export sales for US raised pork dropped from last week’s large number and were below the four-week average. Sales of 33,400 metric tons is still a respectable week.  The largest buyers were Mexico, Japan and Australia.  China purchased 1,200 metric tons, and that includes cancellations or decreases of 1,000 metric tons to previous orders. Some are estimating African Swine Fever (ASF) has caused at least a 20 percent decrease to China’s existing swine herd. 

We are heading in to the best demand period for meat and poultry. Grilling season is gearing up in even the most northern US states.  There is optimism in food service.  The recently released February Restaurant Performance Index was 100.1.  An index of over 100 would indicate growth in the sector.  It should be noted that the Index was fueled higher by expectations rather than current data.  The Current Situation Index that measures same store sales and traffic for February was 95.4.  At least one wholesale meat sales representative has said Wisconsin restaurants were buying more meat, with very strong sales in March. As dine-in service becomes more common nationally, and if restaurants can find enough employees to continue curbside pick-up/takeout we would expect meat to be among the benefactors. The March jobs report said 916,000 jobs were added in March (expectations were for 675,000 jobs added.)   Unemployment decreased to 6 percent.

Choice beef breed steers and heifers at Wisconsin and surrounding state auction markets were steady to higher this week.   High-yielding, high-grading cattle brought 99.00 to 115.00/cwt. with some groups $115.00 to $119.00/cwt. There were reports of a small number of beef breed fed cattle selling higher. Choice and Prime Holstein steers were higher again this week bringing $90.00 to $105.00/cwt. Silage fed, under finished or heavy dairy breed steers brought $70.00 to $92.00/cwt. Dairy x Beef steers were mostly $95.00 to $114.00/cwt. Cows were higher at $50.00 to $65.00/cwt. Blemish free cows in fleshier condition were selling to $71.00/cwt with a small sampling selling higher.  Doubtful health and thin cows were bringing $45.00/cwt and down. Dairy breed bull calves were higher at $50.00 to $140.00/cwt with heavier, well cared for calves up to $185.00/cwt.  Beef and Beef Cross calves brought up to $300.00/cwt. Market lambs remain lightly tested, 110 to 140 pound lambs sold in a wide range, topping at $215.00/cwt for new crop lambs.  Feeder cattle are higher and seeing good demand as we approach grass season.  Higher feed costs are making buyers more selective when it comes to feeder cattle quality, and there is a bias toward heavier cattle for those heading directly to feed.