Packers have seen margins improve and increased their production last week. The estimated harvest totaled 542,000 head, 19,000 more than the previous week and 25,000 fewer than last year. It was the largest harvest since February.
With Labor Day needs filled, the Choice beef cutout dropped $4.88 last week to average $383.39. The announcement to import 660 million pounds of beef is still making headlines and impacting the market. The plan to import grinding meat in a 90-day period could further pressure some cattle prices at a time when they are already working lower. The dairy herd is the largest since 1992, so the number of dairy cows marketed has been increasing. Beef cow culling typically increases in the fall after calves are weaned and cows are pregnancy checked. In short, the supply of domestic grind is expected to increase during the time the imports are expected.
Fed cattle prices are lower than this time last year. Cargill announced it will begin harvesting cattle at its Fort Morgan, Colorado location next Tuesday. Although it is expected that it will take time to reach its normal volume, the increased demand for cattle will be welcomed.
Higher corn prices will affect feedlot margins, although it will likely cause the current record cattle weights to decrease and put less beef on the market. These two bullish factors are currently being overshadowed by headlines. The USDA greenlit a plan to accept 700 cattle per day last week and 900 this week at the Douglas, Arizona port. A total of 2,500 head were accepted last week, and only 100 on Monday of this week. The number of Mexican cattle available will limit imports and make it unlikely that imports will reach pre-border closing levels.
Since mid-May, margins for pig farmers have fallen by about $33/head on a four-quarter rolling average, according to Dustin Baker of Commodity & Ingredient Hedging LLC. Baker cites higher feed costs, heavier carcass weights, abundant domestic protein supplies and a more competitive international pork market. It will take higher hog prices or lower input costs to improve margins, but market signals are not predicting either currently. Pork seems caught between high demand for beef and large supplies of poultry. Broiler availability per capita is projected at a record 106.8 pounds. The pork cutout has come off recent highs, averaging $96.60 last week, making it $1.38 lower, but was $1 higher early this week. Last week's estimated harvest of 2.377 million was 11,000 more than the previous week and 10,000 fewer than last year.
Fed lamb prices have seesawed in recent weeks. The market was called steady to $5/cwt higher after being $3-$4/cwt lower the week prior. Market ewes were called unevenly steady. The lamb cutout value was over $3 lower than last Friday at $673.01. Harvest numbers have been steady. Last week's estimate of 35,000 head was 1,000 more than the previous week and 2,000 fewer than last year. The five-year average carcass weight is 63 pounds but has been in the mid to upper 50s most of the summer.
Fed cattle prices were mostly $2 lower this week. Top quality beef steers and heifers brought $210-$222/cwt. Some high-grading, high-yielding steers with an overnight stand sold up to $224/cwt. Mixed Choice and Select steers and heifers ranged from $195-$210/cwt. High-grading Holstein steers were as much as $5 lower, bringing $190-$210/cwt. Lower-grading steers brought $182-$190/cwt. Silage fed and under finished steers brought $95-$175/cwt. Dairy Beef cross steers were lower, bringing $200-$220/cwt with some higher. Cows were $2-$5 lower, bringing $100- $135/cwt with some selling into the mid $150s. Lower-yielding cows brought $50-$100/cwt. Doubtful health and thin cows brought up to $50/cwt. Dairy breed bull calves were lower, selling from $500-$1,300/head. Dairy breed heifer calves brought $200-$800/head. Beef and Beef Cross calves were lower from $600-$1,500/head. Light and lower quality calves sold up to $60. Fed lambs over 100 pounds brought $220-$300/cwt, with light lambs selling from $260-$325/cwt.
Prepared and written by Jeff Swenson, DATCP Livestock and Meat Specialist. The Market Update draws information from several sources, including trade publications, radio broadcasts, agricultural news services, individuals involved in the industry as well as USDA NASS and AMS reports.
This article originally appeared on Wisconsin State Farmer: Cattle, hog markets feel pressure from supply and imports