Cattle Market Notes Week Ending April 28, 2017

Cattle Quick Thoughts

Futures prices surged this week for both feeder and live cattle, especially near the end of the week. Feeder futures were up about $10 over last week for each contract. Live cattle contracts were up $6 to $9. This was an unexpected rally that was driven primarily by high demand for fed cattle to close out the month. This was a case of the futures market adjusting to the cash market. We are seeing an impressive demand-pull of cattle through the system which is supporting prices at each stage of production. This is in part shown by the decreasing carcass weights. Dressed steer carcass weights are down 30 pounds on average from the same week in 2016. 30 pounds per steer translates to about 9 million pounds of beef weekly. Put differently, it takes an extra 10,000 steers per week to produce the same amount of beef at these lower carcass weights. This pulls more cattle out of the feedlots and increases demand for feeder cattle to take their place. The story of 2017 will continue to be whether demand can outpace the larger supplies that will hit the market. While encouraging, this recent surge may be more of a short-term rally than an indication of continued long-term increases.

Cash Cattle:

Cash traded fed cattle were up $4.63 to an average of $136.25 for live sales. Dressed steers were up $7.59 to an average of $216.81. Fed cattle trade volume was 123,000 head through Thursday.

Feeder cash prices remained relatively steady this week. Mississippi feeder steers weighing 450-500 pounds were down 25 cents this week to average $155.50 while 750-800 pound steers were down $1.50 to $129. Average feeder prices in Oklahoma City for 500-550 pound steers were down $1.70 to $173.01 while OKC 750-800 pound steers were up $1.38 from last week to $141.74. It will be interesting to see if and how feeder prices next week react to the large increases in the futures market over the past few days.

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Futures:

Cattle futures rallied this week. April live cattle were up $8.15 to $138 while June live cattle were up $7.33 to $124.08. May feeder cattle were up $9.22 to $148.48 while May feeder futures were up $11.43 on the week to $153.58. Corn futures prices were down this week with May and July futures down 6 and 5 cents to $3.57 and $3.65, respectively.

Beef:                                                                                           

Wholesale boxed beef prices were higher this week. Choice boxes averaged $219.56, up $3.93 from a week ago. Select boxes ended the week at an average of $206.13, up $3.64 from last week. The choice-select spread was $13.43, up 29 cents from last week.

Note: all cattle and beef prices are quoted in dollars per hundredweight and corn prices are quoted in dollars per bushel unless stated otherwise.

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