Weekly Livestock Comments, June 7, 2013

FED CATTLE: Fed cattle sold $2 to $3 lower compared to last week on a live basis. Prices on a live basis were primarily $122 while dressed prices were not established at press. The 5-area weighted average prices thru Thursday were $123.40 live, down $1.41 from last week and $195.80 dressed, down $3.26 from a week ago. A year ago prices were $122.79 live and $195.58 dressed. Fed cattle trade was slow to develop this week as reported numbers are based on limited cattle trade. Feed lot managers are pressuring packers with higher asking prices due to limited fed cattle availability. However, packers are short bought and concerned about the decline in carcass value. Packers have benefited from strong cutout prices of late and feeders want a little bigger piece of the pie, but seasonality would indicate prices continuing to decline.

BEEF CUTOUT: At midday Friday, the Choice cutout was $201.94 down $1.69 from Thursday and down $5.37 from last Friday. The Select cutout was $184.01 down $0.83 from Thursday and down $3.50 from last Friday. The Choice Select spread was $17.93 compared to $19.80 last week. Choice and Select meats have steadily lost ground this week with little indication of stabilizing. The Choice cutout has declined more than $9 since it posted a record high two weeks ago while the Select cutout has declined just over $7 in the same time period. Packers have found it extremely difficult to pass on higher prices for beef. It appears the cutout prices may have got ahead of themselves and are now in the process of realigning. It is highly likely Choice prices will fall below the $200 mark over the next couple of weeks and find the same resistance point that was so overshadowing last year if the demand for middle meats seasonally slacken. Retail beef movement continues to be hampered by frequent rain events which keep consumers preparing meals indoors instead of outside on the grill as well as by the price of beef relative to prices of pork and poultry. This is the first week in the past six weeks that the Choice Select spread narrowed. Whether the spread will widen or narrow in the next few weeks is highly dependent on consumers’ willingness to swallow high beef prices or trade down to lower quality meat.   TENNESSEE AUCTIONS: On Tennessee auctions this week, feeder steers and bulls were steady to $4 higher. Heifers were steady to $3 lower with most advances occurring on calves under 600 pounds. Slaughter cows were steady to $2 higher through midweek and steady to $3 lower late week while bulls were steady to $1 higher. Average receipts per sale were 556 head on 10 sales compared to 413 head on 10 sales last week and 740 head on 12 sales last year.

OUTLOOK: Cattle receipts remain fairly light again this week as many producers are rolling the last bales of the spring hay cutting. With light movement, lightweight calves found a small resurgence in price. The rains that have been keeping many crop producers from planting corn and soybean thus far are the same rains that many cattle producers have been thankful for. The frequent rainfall and close to average temperatures have continued to promote the growth of cool season grasses. The continued growth of pasture provides an excellent opportunity for cattle to continue putting on pounds of gain at an inexpensive price compared to the alternative feed sources. Corn prices remain elevated which results in a high cost of gain in the feedlot. The high cost of gain in the feedlot has kept yearling cattle prices in check as they have moved sideways much of the spring. It is likely that feeder cattle prices will continue to move sideways until late summer when there is a better idea of corn and soybean yields. If corn yields appear they will be favorable this fall then feeder cattle prices are likely to strengthen. However, if the corn yield is adversely affected in some manner then prices of feeder cattle are likely to continue struggling as they did through the spring. Now is the time to be preparing for marketing calves in the fall. No one producer can set the price of cattle, but there are a number of management decisions that can be made that increase the value of the spring calf crop such as castrating, dehorning, fly control, vaccinating, and marketing through an alliance, feeder calf sale, or in a load lot. Cull cow prices continue to strengthen this week, but they are about $9 per hundredweight lower than the same week a year ago when cull cow prices reached their 2012 peak. Further strengthening is likely to be limited as we head deeper into summer and fall due to increased cow marketings.

TECHNICALLY SPEAKING: Based on Thursday’s closing prices, June closed at $120.45. Support is at $120.14, then $119.52. Resistance is at $120.77, then $121.39. The RSI is 47.66. August closed at $120.03. Support is at $119.37, then $118.29. Resistance is at $120.44, then $121.52. The RSI is 48.31. October closed at $123.08. Support is at $122.40, then $121.75. Resistance is at $124.20, then $124.30. The RSI is 46.39. August feeders closed at $144.65. Support is at $144.07, then $143.02. Resistance is at $145.12, then $146.17. The RSI is 45.13. October feeders closed at $148.75. Support is at $148.48, then $147.75. Resistance is at $148.78, then $149.25. The RSI is 46.09. January feeders closed at $150.15. Support is at $149.90, then $149.25. Resistance is at $150.25, then $150.55. The RSI is 47.42. Friday’s closing prices were as follows: Live/fed cattle – June $120.13 -0.33; August $119.23 -0.80; October $122.60 -0.48; Feeder cattle – August $143.63 -1.03; October $147.68 -1.08; November $149.40 -0.98; January $149.40 -0.75; July corn closed at $6.66 up $0.03 from Thursday.

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

Jefferson Farmers Co-op 08112014