Weekly Livestock Comments, June 21, 2013

FED CATTLE: Fed cattle trade was slow to develop this week with asking prices firm compared to a week ago. Live ask prices were $121 to $122 and dressed prices were $195 to $196. Bid prices on a live basis were $117 to $118 and dressed bids were $192. The 5-area weighted average prices thru Thursday were $121.37 live, down $2.84 from last week and $193.57 dressed, down $0.74 from a week ago. A year ago prices were $117.80 live and $187.87 dressed. Live cattle Futures market trade made large positive movements today as hog markets lost ground and a little weakness became evident in the corn market. What does this really mean for live cattle cash prices some may ask? The futures market either expects a softer basis or a higher cash market would be the answer. Seasonality of live cattle prices supports a further decline in the cash market as does the seasonal increase in live cattle supplies and the weakening of cutout prices.

BEEF CUTOUT: At midday Friday, the Choice cutout was $199.54 up $0.24 from Thursday and down $0.61 from last Friday. The Select cutout was $186.41 up $0.53 from Thursday and up $2.86 from last Friday. The Choice Select spread was $13.14 compared to $16.60 last week. Choice meats have fallen below the $200 mark. Middle meats were the catalyst for the Choice cutout displayed prior to Memorial Day. However, Memorial Day is a distant memory from a packer’s standpoint as packers’ hope was focused on the July 4th (Independence Day) holiday. Most of the meat purchases for Independence Day have been made and the much needed support for beef prices is just not present. Many retail advertisements are pushing pork as pork items are a more economical buy for many consumers. Much of the drive is coming from pork bellies and the loin while sausage and hotdog demand have seen improvements as well. The increased demand is evident in the pork cutout price that has increased by about 34 percent since the end of March to about $106 per hundredweight. Middle meats have been the driver of the beef cutout thus far with little help from end meats. However, ribeye and loin prices have softened as have round prices. The select cutout gained ground this week which may be a result of consumers trading down from Choice cuts to Select cuts so they can continue enjoying the beef flavor.   TENNESSEE AUCTIONS: On Tennessee auctions this week, feeder steers were steady to $2 higher. Bulls were steady to $1 lower except for 650 to 750 pounders being $3 to $4 higher. Heifers were $1 to $4 higher. Slaughter cows were steady to $2 lower while slaughter bulls were $1 to $2 lower. Average receipts per sale were 527 head on 10 sales compared to 634 head on 11 sales last week and 654 head on 12 sales last year.

OUTLOOK: Seasonality seems to have a strong hold on prices for most classes of cattle. Slaughter cows and bulls are trending down as they have traditionally done and there is no indication they will buck the trend. Breaking utility cows over the past ten years have declined on average 20 percent from their yearly high. Prices in the fall of 2012 declined 18.9 percent from the peak price experienced in early June of 2012. This would indicate that 2013 cull cow prices will decline from a peak of $80 to $64 per hundredweight this fall. It is not anticipated that cull cow prices will decline by this magnitude as the number of cows going to market is expected to decline with improving pasture conditions and the desire to rebuild the herd. Many cow calf producers east of I-35 have sufficient forage supplies and are attempting to retain breeding stock which will limit cull cow movement. Feeder cattle supplies are tight, and it appears some buyers are trying to get their hands on these cattle before prices on this class of cattle jump in late summer. Feeder cattle supplies are expected to remain tight for the rest of the year due to expected heifer retention and low numbers in general. These two aspects bode well for a strong fall market. Producers with stocker calves ready to sale might benefit from a preconditioning program that will place a little more weight on these calves to be sold later in the year. However, preconditioning and backgrounding calves is not for everyone due to available resources and this management decision must be evaluated on individual operations.

The June cattle on feed report for feedlots with a 1000 head or more capacity indicated cattle and calves on feed as of June 1, 2013 totaled 10.7 million head down 3.1% compared to a year ago and in line with pre-report estimates. May placements in feedlots totaled 2.05 million head, down 1.7% from a year ago while pre-report estimates expected placements to decline 4.1%. May marketing’s totaled 1.95 million down 3.4% from 2012 with pre-report estimates only have marketings down 2.1%. Placements on feed by weight: under 700 lbs. down 21.6%; 700 to 799 lbs. up 4.7% with cattle over 800 lbs. up 19.6%. Overall, little change is expected in the marketplace.

TECHNICALLY SPEAKING: Based on Thursday’s closing prices, June closed at $119.95. Support is at $119.48, then $118.58. Resistance is at $120.38, then $121.28. The RSI is 47.74. August closed at $120.00. Support is at $119.46, then $118.58. Resistance is at $120.33, then $121.21. The RSI is 50.59. October closed at $123.85. Support is at $122.98, then $121.65. Resistance is at $123.95, then $124.05. The RSI is 52.49. August feeders closed at $144.43. Support is at $144.41, then $144.38. Resistance is at $144.44, then $144.46. The RSI is 47.14. October feeders closed at $148.65. Support is at $148.30, then $148.15. Resistance is at $148.95, then $149.05. The RSI is 47.72. January feeders closed at $150.25. Support is at $150.20, then $149.58. Resistance is at $150.90, then $151.05. The RSI is 48.85. Friday’s closing prices were as follows: Live/fed cattle – June $121.25 +1.30; August $121.60 +1.60; October $125.13 +1.28; Feeder cattle – August $146.93 +2.50; October $150.70 +2.05; November $152.00 1.85; January $151.90 1.65; July corn closed at $6.62 down $0.12 from Thursday.

Source: Dr. Andrew P. Griffith, University of Tennessee Institute of Agriculture

Jefferson Farmers Co-op 08112014