Weekly Crop Comments, May 17, 2013
FED CATTLE: Fed cattle sold mainly $1 lower compared to last week on a live basis. Prices on a live basis were primarily $125 to $126 while dressed prices ranged from $200 to $201. The 5-area weighted average prices thru Thursday were $124.79 live, down $1.43 from last week and $199.76 dressed, down $2.98 from a week ago. A year ago prices were $121.43 live and $193.66 dressed. Live cattle futures continued their plunge this week and the cash price followed. Some feeders may be wondering if there is a bottom to this price slide as feeding losses continue to pile up. The market is likely to continue trending lower next week as more calf fed animals are likely to hit the market. Fed cattle prices may see a small resurgence at some point, but seasonal patterns point to prices continuing to decline through July though it is unlikely prices will dip as low due to lower supply.
BEEF CUTOUT: At midday Friday, the Choice cutout was $208.96 up $0.19 from Thursday and up $3.41 from last Friday. The Select cutout was $192.52 down $0.19 from Thursday and up $1.41 from last Friday. The Choice Select spread was $16.44 compared to $14.43 last week. With no pun intended, the Choice cutout has caught fire through the first half of May and is blazing a trail. The Choice cutout has increased more than $17 the past three weeks and has shown little to no weakness in doing so while the Select cutout has jumped more than $8 in the same time frame. The $200 dollar mark for the Choice cutout was a resistance point in 2012, and now some may be asking if we can break the $210 barrier. May and June are the highest demand months for beef so if there is a time to do it then the time is now. Warmer weather and the quickly approaching Memorial Day weekend are major drivers in the run up in prices. Consumers are firing up the grills and throwing beef on the rack which provides tremendous support to the cutout. In addition, lower cattle numbers resulting in less domestic beef production could play a large role in where beef prices go. There are some concerns if these cutout prices can be sustained when comparing beef prices to pork and poultry prices. Beef has had a larger price jump relative to pork and poultry prices which could result in some consumers substituting pork and poultry for beef at some point. TENNESSEE AUCTIONS: On Tennessee auctions this week, feeder steers and bulls were $3 to $7 lower. Heifers were steady to $5 lower. Slaughter cows were $1 to $2 higher with instances of $4 higher while bulls were $1 to $2 higher. Average receipts per sale were 708 head on 9 sales compared to 536 head on 11 sales last week and 564 head on 11 sales last year.
OUTLOOK: The one bright spot continues to reside in the cull cow market as prices are seasonally increasing as demand for slaughter cattle picks up. Cull cow prices generally peak toward the end of May and early June providing an ideal time for producers to sale cull cows at a time of strong prices before drought or some other unforeseen factor forces the culling process into motion. It is unlikely the cull cow market price will fall off as quickly and as much as typically seen due to lower cattle inventory. Fewer cattle going to market in the fall should help support the cull cow price, but the fall price is not likely to be as strong as the peak in late May and early June. August feeder cattle futures have declined more than $6 the past three weeks which has continued to put a damper on local feeder calf prices. Lightweight calves have suffered the most as there is little interest in taking on any cattle locally. Many areas of the country have other things on their mind than purchasing cattle. Many in the Midwest are busy planting corn while there are a few dry days while parts of the Plains states are still concerned about not getting enough moisture and not having much grass due to cool weather earlier this month. Local buyers in the Southeast are facing some of the same problems. However, the Southeast has been shifting pasture to row crops resulting in less land to carry cattle.
The May cattle on feed report for feedlots with a 1000 head or more capacity indicated cattle and calves on feed as of May 1, 2013 totaled 10.7 million head down 3.3% compared to a year ago and in line with pre-report estimates. April plac ements in feedlots totaled 1.75 million head, up 15.1% from a year ago and within the pre-report estimates range. April marketing’s totaled 1.86 million, up 2.2% from 2012 which is similar to pre-report estimates. Placements on feed by weight: under 700 lbs. up 6.6%; over 700 lbs. up 20.6%. To the naked eye, the year to year increase in placements appears large but that is due to small placements in 2012.
TECHNICALLY SPEAKING: Based on Thursday’s closing prices, June closed at $119.90. Support is at $119.63, then $119.00. Resistance is at $120.25, then $120.88. The RSI is 40.25. August closed at $119.72. Support is at $119.42, then $118.84. Resistance is at $119.99, then $120.57. The RSI is 37.28. October closed at $122.88. Support is at $122.80, then $122.70. Resistance is at $123.25, then $123.80. The RSI is 35.06. May feeders closed at $135.02. Support is at $135.01, then $134.98. Resistance is at $135.03, then $135.06. The RSI is 32.01. August feeders closed at $145.13. Support is at $144.75, then $144.05. Resistance is at $145.45, then $145.15. The RSI is 38.23. October feeders closed at $149.23. Support is at $148.75, then $148.58. Resistance is at $149.35, then $150.33. The RSI is 40.04. Friday’s closing prices were as follows: Live/fed cattle – June $119.40 -0.50; August $118.55 -1.18; October $121.98 -0.90; Feeder cattle – May $133.90 -1.13; August $143.38 -1.75; October $147.80 -1.43; November $149.20 -1.20; July corn closed at $6.53 up $0.11 from Thursday.
