I
just returned to Stillwater after several weeks of travel. Late last week I was
in central Nebraska on the eastern side of the Sand Hills. Excess water
continues to be an issue there with continued flooding and roads washed
out. Bottomlands used for hay production are too wet for haying or
grazing. In other regions, haying is delayed and producers are struggling
to harvest high quality hay but lots of hay production is underway. Fed
and feeder cattle cash markets both jumped sharply last week, led by higher
Live and Feeder futures. This comes after several weeks of pressure and a
somewhat overdone futures correction. Uncertainty continues to plague
cattle markets with broader trade and political uncertainty augmented by
unknown and evolving feed market conditions. Corn will no doubt be higher
on a smaller crop this year but exactly how much higher and smaller remains an
unknown. Both corn acreage and yield are uncertain at this time. Heavy
feeder cattle prices abandoned the seasonal pattern in early May with weaker
prices thus far this summer. However, feeder markets may be set to pick
up some of the seasonal trend to higher prices in the next month. Heavy
feeders typically peak in late summer. Fed cattle prices typically move
to a seasonal low in late summer. Last week’s jump in cash fed could
represent a summer low but there are still several weeks of summer before a low
can be assured. Boxed
beef cutout values had an early spring peak and have dropped seasonally
since. Current Choice boxed beef values are still under pressure but are
above last year at this time. However, Select wholesale beef prices are weaker
resulting in a Choice-Select spread that is moving higher counter-seasonally at
the current time. Choice beef primals have mostly improved recently and
are generally higher than last year at this time; except loins which are just
slightly lower year over year. Choice beef brisket continues the
juggernaut of recent years running 13 percent higher year over year since
mid-April but Select briskets weakened sharply in the past three weeks, running
12 percent down year over year. Beef
markets are trying to sort out a number domestic and international market
issues. The latest beef trade data was better with May exports about
equal to last year; although imports continue to grow year over year so far
this year. However, domestic beef markets continue to struggle under
relatively poor summer grilling weather thus far and struggling macroeconomic
conditions. Ample supplies of meat are weighing more heavily on the
market as well. In particular, large pork supplies and the failure
of anticipated Chinese demand for pork to materialize is pushing pork wholesale
values lower adding to beef wholesale price pressure Trade
and global conditions, feed market conditions, and summer demand conditions are
all contributing to uncertainty and lack of direction as cattle and beef
markets slog through the summer doldrums.
Source: Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist
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