Weekly Livestock Comments, March 15, 2013
FED CATTLE: Fed cattle sold mainly $1 lower compared to last week. Prices on a live basis were primarily $126 to $127 while dressed prices were primarily $201. The 5-area weighted average prices thru Thursday were $126.51 live, down $1.21 from last week and $202.85 dressed, down $0.41 from a week ago. A year ago prices were $126.34 live and $202.23 dressed. The fed market has struggled to maintain last week’s pace, and part of that is due to the beef cutout stalling this week compared to last week. Live cattle futures are not helping this situation either as all contract months continue to weaken. It would be nice to pass along some positive news, but positive news seems to be few and far between. The only upside news is fed cattle prices are a little better than year ago prices. However, that is not as positive as it may seem since the supply of cattle is waning.
BEEF CUTOUT: At midday Friday, the Choice cutout was $195.92 down $0.40 from Thursday and down $1.80 from last Friday. The Select cutout was $194.20 down $0.93 from Thursday and down $0.90 from last Friday. The Choice Select spread was $1.71 compared to $2.62 last week. Positive information in the beef sector has been non-existent the past couple of weeks, and it is not helping to strengthen cutout prices. The hottest topics are all negative towards the movement of beef. Russia banned the import of U.S. meat, including beef, on February 11 over a commonly used feed additive, ractopamine, used to enhance growth and leanness. Russia wants meat from the U.S. to be certified free of ractopamine. A separate issue is in relation to the furlough of governmental workers. The latest report is that USDA meat inspectors will be furloughed a total of 11 days from July through September. This will back-up the marketing of cattle as packing facilities cannot process animals without a USDA inspector. Cattle on feed longer will result in heavier cattle which increases the amount of product and thus decreases the price. The latest mandatory country of origin labeling (MCOOL) proposal has drawn ire from Canada and Mexico, and Canada has said they may institute retaliatory efforts. TENNESSEE AUCTIONS: On Tennessee auctions this week, feeder steers under 600 pounds were steady to $1 higher with those over 600 pounds steady to $1 lower. Feeder bulls were unevenly steady. Heifers under 600 pounds were steady to $2 higher with those over 600 pounds steady to $2 lower. Slaughter cows and bulls were steady to $1 higher. Average receipts per sale were 637 head on 11 sales compared to 573 head on 11 sales last week and 708 head on 12 sales last year.
OUTLOOK: Local cattle markets are starting to show a little consistency with previous years as we hit the ides of March. Lighter weight calves gained a little steam last week and were able to keep the momentum this week. Stocker producers seem primed to make a few purchases to place calves on grass as we watch the brown turn to green. Adequate precipitation across the state and warmer air pushing its way into the area has promoted the cool season grasses to start showing some more green. Lighter weight calves will likely continue to receive most of the attention for the next few weeks, but interest will decline as we approach summer months. Feeder cattle appear to be in a holding pattern which might be expected as feedlots continue to face expensive feed costs and the potential for USDA meat inspectors to be furloughed which could result in fed cattle remaining on feed longer than desired. Increasing the number of days cattle are on feed will increase total cost with little to no return as cattle feed efficiency declines towards the end of the feeding period. It is anticipated that feeder cattle prices will strengthen considerably during the summer months. However, the current market price is indicating that producers should hold those cattle and continue putting cheap gain on them with forage. If forage is available then the expected price increases may warrant holding those cattle a couple more months if possible. Slaughter cows continue to follow the seasonal pattern with prices expected to continue increasing into May. If there are cows that need to be culled from the breeding herd then it would be beneficial to start making plans to market those cattle over the next couple of months when slaughter cow prices tend to be the highest.
TECHNICALLY SPEAKING: Based on Thursday’s closing prices, April live cattle closed at $128.05. Support is at $127.57, then $126.47. Resistance is at $128.67, then $129.77. The RSI is 38.76. June closed at $123.15. Support is at $122.60, then $121.55. Resistance is at $123.65, then $124.70. The RSI is 35.30. August closed at $124.38. Support is at $124.13, then $123.90. Resistance is at $125.73, then $125.75. The RSI is 37.30. March feeders closed at $138.27. Support is at $138.26, then $138.23. Resistance is at $138.28, then $138.31. The RSI is 30.32. May feeders closed at $143.30. Support is at $143.29, then $142.50. Resistance is at $145.25, then $147.40. The RSI is 29.89. August feeders closed at $150.48. Support is at $150.10, then $150.05. Resistance is at $151.25, then $151.88. The RSI is 33.28. Friday’s closing prices were as follows: Live/fed cattle –April $125.77 -2.28; June $121.30 -1.85; August $122.53 -1.85; Feeder cattle – March $136.68 -1.60; April $139.10 -2.45; May $141.08 -2.23; August $148.03 -2.45; May corn closed at $7.17 up $0.01 from Thursday.
