Cattle Market Update

 

As I mentioned last week, I want to send out a short weekly update on our cattle markets for the near term. Things are very volatile and are moving very fast, so I think more frequent communication is probably better right now. USDA-AMS sends the Kentucky weekly livestock summary out on Friday, which really includes sales from the previous Friday to Thursday (the day before). This summary is based on sales from March 20-26.

 

While I try to follow daily reports from across the state, I typically view those mostly anecdotally. I feel more comfortable sharing weekly summary data that compiles a large number of cattle sales. But, this can also be misleading when markets are moving quickly as prices can be very different from early week sales to late week sales. Last week was a good example as markets were down sharply, but showed quite a bit of improvement in the second half of the week. That strength continued into this week and summaries are showing huge improvements. Prices rallied across the board at Kentucky auctions. Virtually every category is quite a bit higher – calves, feeders, cows, and bulls. To be honest, I send this out with some hesitation as I am afraid it overstates the improvement in the market and may not be sustainable in this environment. Still, this is the USDA-AMS weighted average price data for the week and that is what I am sharing. Just remember that these markets are evolving daily and are very volatile right now.

 

Based on weekly averages, 850 lb Medium / Large Frame #1-2 steer prices gained over $15 per cwt from last week. At the same time, 550 lb M / L 1-2 steer calf prices also rallied, but by just under $15 per cwt. Both series can be seen in figure 1. This would actually put 850 lb steers $3-5 per cwt back of where they were in early March and would put calf prices almost at their early March levels. There is no doubt that our markets improved this week, but remember Monday and Tuesday brought limit up movements on the board, but were followed by sharp decreases. All that said, I would not be at all surprised if I reported lower prices next week, especially for heavy feeders. Calves are being helped by spring weather and pasture growth, which increases demand from stocker operators, but even they may have trouble sustaining these price gains.

 

I also talked last week about the slaughter cow and bull markets, which have been a real bright spot recently. Ground beef movement appears to have created increased demand and that has translated into price improvement. The state average price for an 80-85% boning cow increased by almost $10 per cwt this week. And, note in figure 2, that those prices had not fallen any earlier this month. A similar story can be told for slaughter bulls. Obviously, there will be a lot of variation around these state average prices, but they tell a story of general price improvement this week.

 

I will conclude my comments by saying that guessing prices in a volatile environment is a fool’s game. But, I typically don’t shy away from sharing my thoughts on where things are. Our feeder cattle markets got hit harder than I expected in the second and third week of March. But, I also think it will be very hard to sustain the gains that we saw this week in the short-term. Most importantly, producers should focus on the things they can control – producing high quality calves, adding weight efficiently, and making good management decisions. Very seldom do decisions made hastily out of fear end up being good ones.