Weekly Livestock Comments, April 12, 2013
FED CATTLE: Fed cattle on a live basis sold mainly $1 lower compared to last week. Prices on a live basis were primarily $127 to $128 while dressed prices were $198 to $201. The 5-area weighted average prices thru Thursday were $127.23 live, down $1.06 from last week and $200.36 dressed, down $4.11 from a week ago. A year ago prices were $122.08 live and $194.93 dressed. Live cattle are trading with a strong positive basis, but the cash price is still weaker than expected as the market lost ground compared to last week. The time period for prices to make any large positive price movements will be drawing to a close in a few weeks as we normally see live cattle prices decline during the summer. The inability to move cattle at higher prices continues to result in losses for the feeder and for the packer because of the struggles of pushing the cutout price higher.
BEEF CUTOUT: At midday Friday, the Choice cutout was $189.87 down $0.28 from Thursday and down $1.82 from last Friday. The Select cutout was $184.12 up $0.13 from Thursday and down $4.17 from last Friday. The Choice Select spread was $5.75 compared to $3.40 last week. The cutout had a whisper of hope last week, but that hope has blown away like the late week storm through the Southeastern United States. Another weather related issue disturbing the normal meat consumption pattern is the cold weather that continues to maintain its grip on many parts of the nation. Consumers are very reluctant to fire up the grill when cool temperatures continue to persist in many regions which put a damper on the cutout price. The retail price of beef is still high relative to the price of competing meats such as pork and chicken. Consumers have been altering their meat purchase patterns due to the high beef price and will continue to do so if pork and poultry prices remain low relative to beef prices. The export market continues to be a concern as Russia continues to keep its market closed to U.S. meet until there is certification that the meats they purchase are free of ractopamine residue. In addition, Canada has vowed to impose tariffs on meats imported from the U.S. due to the proposed change in Mandatory Country of Origin Labeling not meeting what they deem as acceptable. TENNESSEE AUCTIONS: On Tennessee auctions this week, feeder steers and bulls were $2 to $8 lower. Heifers were $1 to $8 lower. Breaker and boner slaughter cows were $3 to $4 lower with lean cows being steady and bulls $1 to $4 lower. Average receipts per sale were 811 head on 12 sales compared to 692 head on 12 sales last week and 583 head on 12 sales last year.
OUTLOOK: If warmer weather would ever settle in then maybe the lightweight feeder calf market would finally pick up. Grass in many pastures has been green for over a month, but growth has been minimal at best. Continued high feed cost keep stocker and backgrounding operations at bay as the preference is to put these lightweight animals on grass to contribute the majority of the gain. Moisture has not been a factor in the Southeast, but temperatures continue to hamper the process. The Plains states have also picked up some moisture to promote pasture growth and put a little water back in the ponds. However, freezing temperatures within the last two weeks have likely damaged grain development in parts of the wheat crop. This damage will result in wheat originally destined for grain harvest to be harvested for hay instead. The opportunity for cow-calf producers may be in preconditioning and backgrounding calves this summer and marketing them as 700 to 800 pound animals towards the end of July or the first couple of weeks in August. Optimistically, prices on lightweight cattle will increase as the temperatures warm and grass grows, but stocker producers may not want to take the risk this late in the year as it may not provide enough time for the animals to grow to the desired weight for the desired marketing window. The interest in bred females has yet to take off and will garner little attention with calf prices as low as they are. The cull cow market continues to be sluggish as cow slaughter remains elevated. Elevated cow slaughter could continue to place pressure on the cull market that normally peaks the third or fourth week in May. The low supply of feeder cattle will eventually be a player in the market, but it has not come into play as quickly as most expected. We may have to wait a few months before we witness any significant changes in the overall cattle complex.
TECHNICALLY SPEAKING: Based on Thursday’s closing prices, April live cattle closed at $125.57. Support is at $125.32, then $124.77. Resistance is at $125.87, then $126.42. The RSI is 40.39. June closed at $120.65. Support is at $120.24, then $119.47. Resistance is at $121.02, then $121.79. The RSI is 39.34. August closed at $121.28. Support is at $121.00, then $120.70. Resistance is at $122.58, then $123.00. The RSI is 36.99. May feeders closed at $141.77. Support is at $141.52, then $140.80. Resistance is at $142.25, then $142.98. The RSI is 39.36. August feeders closed at $148.83. Support is at $148.70, then $147.23. Resistance is at $149.18, then $151.93. The RSI is 39.81. October feeders closed at $152.30. Support is at $151.50, then $150.95. Resistance is at $152.75, then $154.80. The RSI is 41.71. Friday’s closing prices were as follows: Live/fed cattle –April $125.85 +0.28; June $120.75 +0.10; August $121.40 +0.13; Feeder cattle – April $137.93 -1.30; May $140.93 -0.85; August $147.80 -1.03; October $151.08 -1.23; May corn closed at $6.59 up $0.07 from Thursday.
