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Agricultural News


Market Update from CAB's Paul Dykstra

Wed, 18 May 2022 13:51:00 CDT

Market Update from CAB's Paul Dykstra The fed cattle market remained rangebound, with the volume of trade still within a wide range from $140/cwt. in the south to $146/cwt. in the north. The weighted average last week came in $1/cwt. lower than the week prior at $143/cwt. in the live spot trade.
     

Live Cattle Futures contracts have mostly failed to perform to expectations since early May. The upfront June contract debuted with a $135/cwt. close on May 2 but has only given up value since closing Friday at $132/cwt.
     

The May fed cattle basis tends to be quite strong compared to the contract month of June. However, we're half way through May with roughly a $10/cwt. basis last week. That, coupled with the downward trend mentioned above, doesn't provide much positive sentiment to fed cattle sellers.
     

Using the Choice cutout value as a proxy, cutout prices continued to decline through the end of last week, down to $256/cwt. from their mid-April high of $274/cwt.


The downtrend in cutout values is indicative of a boxed beef market that needed to adjust lower to meet consumer demand. Consumer appetites for beef have likely not wavered, given the strong demand signals we've observed through the end of 2021. However, inflationary price pressure has reached the grocery aisles and consumers are not as enthusiastic to buy beef at recent price levels.
     

The pace of fed cattle slaughter has been strong and packers have a positive profit margin to work from, although smaller than in many recent months. This has incentivized the weekly slaughter pace, but boxed beef inventory is slower to move at this point, prompting price reductions and encouraging buyers to step in to the market. With Memorial Day just ahead, it appears that renewed buying interest from retailers will create some lift in the market and spot market activity.
     

Middle meat items such as ribeyes, strip loins and tenderloins are reflecting the market pressure with notable downward price moves in the past few weeks. Similarly, flat irons have seen a steep downward price trend from wildly inflated price points relative to other cuts. Brisket prices typically spike this time of year but have fallen 13% since mid-April in a counter-seasonal move.

Article courtesy of Paul Dykstra with Certified Angus Beef


   

 

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