Cattle Markets Under Spring Pressure

Both June and August Live Cattle futures prices fell below the $100 barrier at the CME this week.

In a light trade of fed cattle in Kansas on Tuesday, cash prices were reported at $118 per cwt., fully $3 lower than last week.

Analysts note that the bulk of cattle will trade later in the week, and feeders are obviously asking more, but it’s a significant worry when early April prices are headed south.

April typically represents a high-point for fed cattle, but increasing beef supplies and escalating numbers of cattle on feed have left many wondering if the market’s highs have already been posted.

Ag markets remain concerned over foreign trade issues, and spillover worries from Wall Street add to traders’ uneasiness. Recent slaughter numbers are running 2% below the same period as last year, and the March average was near 600,000 head per week.

Those numbers are puzzling to analysts, who estimate packer margins at $100 to $150 last week. Even as cash cattle prices have declined, the beef cutout price has remained relatively strong. Tuesday’s Choice cutout was near $220 per cwt., which is about $3 per cwt. higher than the same time a year ago. The Select cutout was $211 per cwt. on Tuesday.

Weakness in the fed cattle market has also spilled over into the feeder cattle ad calf markets. Last week feeder steers sold $1 to $5 per cwt. lower, and lighter calves in the Southeast sold as much as $8 lower.