Cattle Quick Thoughts
The latest Cattle on Feed Report was released on Friday, May 26th. Inventory in feedlots on May 1st was 11 million head, up 2 percent over the same time in 2016. Feeder cattle placements continued to significantly outpace 2016. There were 1.85 million head placed into feedlots during the month of April – up 11 percent over last year. Fed cattle marketings were also higher than last year at 1.7 million head. This is 3 percent higher than in 2016. Feeder futures and live cattle futures prices dropped after the report was released. Why did the futures markets react negatively? A primary reason is expectations. Projections prior to the report were that May 1st feedlot inventory would be about 1 percent higher than in 2016 and that placements would be about 7 percent higher than last year. Since the report showed there are more cattle in feedlots than anticipated, the futures market reacted negatively to information of larger supplies. Whether or not a slight response occurs in the cash markets next week remains to be seen. It is possible that this report could lead to a small short-term decrease in cattle prices as the market adjusts to this new information.
Cash traded fed cattle prices were lower this week. Fed steers were down $2.68 to an average of $131.59 for live sales. Dressed steers were down $4.14 to an average of $208.60.
Feeder cash prices were mostly unchanged this week in Mississippi. Mississippi feeder steers weighing 450-500 pounds were down 50 cents to an average of $157.50 while 750-800 pound steers were up 50 cents to $132.50. Average feeder prices in Oklahoma City were up slightly on Monday and Tuesday. OKC 500-550 pound steers were up $1.05 to $172.16 while OKC 750-800 pound steers were up $3.46 from last week to $149.65.
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June live cattle were down $1.18 to $122.63 while August live cattle were down $2.50 to $118.88. August feeder cattle were down $4.08 to $147.20 while September feeder futures were down $3.83 on the week to $147.10. Corn futures prices were up slightly this week with July up a penny to $3.73 and September up 2 cents to and $3.81.
Boxed beef values were slightly lower this week. Choice boxes averaged $246.28, down $2.08 from a week ago. Select boxes averaged $220.21, down $2.77 from last week. The choice-select spread grew to $26.07, up 69 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.