By Jeff Swenson, Livestock & Meat Specialist at DATCP
Cash cattle trade developed early in the week most of this summer. The past two weeks, however, have seen a slow start with most active cash trading on Thursday and Friday. The late-week packer buying is certainly a more traditional pattern, one that has played out for years in the beef sector. It’s often the result of a gap between asking price from feedlot operators and bids form packers. Beef cut-outs have been on a slide, losing more than $13.00 in just over two weeks. It’s post-summer seasonality unfolding – in a typical year, wholesale beef prices would put in a seasonal low during the first week to 10 days of October. The continued supply of heavy cattle is putting more beef on the market. The latest National Weekly Fed Cattle Comprehensive from the USDA reports carcass weights at 896.6 pounds, up from 888.9 the previous week. There are heavy cattle to clean up, but we are approaching the time when lower feedlot placements in the first and second quarter means fewer market ready cattle during the fourth quarter of this year and the beginning of 2021. There’s evidence to suggest we’re at the end of the cattle backlog. Lighter carcass weights that come with a current cattle supply would be a clear indication of progress.
Most analysts agree there’s a backlog of hogs that need to be worked through the system in the fourth quarter. The extent of the backlog is where many disagree. Unlike cattle, carcass weights are not increasing, in fact they have dropped and seem to be holding steady. Cash prices remain low, but there aren’t heavy hogs adding even more pork to already huge supplies. Interpretations and opinions of the carcass weights include…the back-up of hogs just isn’t there; farmers are doing a good job of adjusting rations to slow rate-of-gains during this time, and the discontinuation of ractopamine usage has caused lighter hogs. Unlike beef, pork cutout values are increasing. South Korea and China have announced a ban on pork imports from Germany due to a wild boar testing positive for African Swine Fever (ASF.) Germany is making every effort to keep ASF out of commercial hog farms. German pork production is modern, and biosecurity isn’t a new concept to farmers there. Upcoming holiday demand and a possible increase in pork exports to South Korea and China would be a good combination to spur cash hog prices higher. There are reports 6,200 new swine farms have been approved by the Chinese government for construction in 2020. China wants to produce as much pork as they can domestically with less reliance on imports – further proof that China is a short-term market opportunity of US pork.
Sheep and lamb prices were higher last week. Retail activity has been strong, showing that lamb purchases were up at the retail level. Loin Chops, Shoulder Blade Chops, and Leg Shanks/Butts were the most common items among lamb features and consumer prices were steady to higher. Strong prices and demand are good news for a meat that is often associated with foodservice, especially white table cloth restaurants.
The USDA released its September World Agricultural Supply and Demand Estimates (WASDE) last Friday (9/11.) Expected beef and turkey production was increased from the August report, while pork and chicken estimated production was lowered. The decrease in pork production was based on current harvest rates and lighter carcasses. The US corn yield estimate was decreased from 181.8 bushels per acre in the August report to 178.5. Soybeans were adjusted lower as well, from 53.3 bushels per acre in August to 51.9 in the September report.
High yielding Choice beef breed steers and heifers started the week steady again and picked up steam, bringing $100.00 to $105.00/cwt with high-yielding lots bringing $106.00 to 110.00/cwt.. Holstein steers were steady to higher at $94.00 to $98.00/cwt, with some exceptional lots bringing $99.00 to 101.00/cwt. Cows were to mostly $2.00 higher with most bringing $47.00 to $61.00/cwt. Blemish-free, fleshier cows brought up to $74.00/cwt. Dairy breed bull calves were mostly steady to higher at $60.00 to $175.00/head with a few bringing up to $190.00/head.