Demand Light, Trading Sluggish

4/13/2013 7:00 AM

Slaughter steers continue to trade at a sluggish pace, trending $1 to $2 lower this week. Demand has been light on moderate supplies. Quality has been average to good with plenty of well-fed Choice cattle being sold.

Kosher demand has been limited and these specialty slaughters have cut their kills back significantly. Our larger conventional packers have expressed limited interest in auction cattle, but instead have plenty of direct sales and contracted cattle meeting their supply needs.

Our Eastern markets continue to struggle to keep pace with the trade activity in the Midwest. Feedlots across the Plains sustained last week’s rally with a steady to firm trade. Most lots sold cattle between $128 and $129 per hundredweight midweek, with dressed sales from $203 to $205.

Boxed beef values made some modest gains from the previous week’s low of $189.05 per hundredweight (Choice Cutout) to April 4’s close of $191.72, but not nearly enough to reflect the $129 per hundredweight purchase price for fed cattle. Implied market prices would suggest negative margins of more than $25 per head for packers.

Cow markets were off slightly across most of the Pennsylvania region, but demand remains good on active trade. Cargill-Wyalusing has announced plans to expand its ground beef production capacity due to increased demand.

Regardless of what current market values would imply, beef markets are moving into the strongest demand period of the year. Historically, as spring sets in, demand improves by about 6 percent from May to June.

Currently, packers have maintained margins by reducing slaughter levels to just around 600,000 head per week, which is holding about 3 percent behind last year’s levels.

Dressed weights have fallen below last year’s levels but are still well above the five-year average. Unfortunately, high-priced feeder cattle placed back in the fall, combined with high corn and bean prices, have many of these slaughter-ready cattle losing money.

Pennsylvania Center for Beef Excellence Inc. with information from the CME Report, Cattle Buyers Weekly and other sources. For more information, call 717-705-1689.

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