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CME: Surge in Cash Cattle Prices During W17/2017

01 May 2017

US - Cash cattle prices surged last week as packers chased limited supplies of market-ready animals, reports Steiner Consulting Group, DLR Division, Inc.

Surging cash prices pulled futures market prices much higher during the week and “life of contract” high prices were common. USDA’s Agricultural Marketing Service (AMS) Market News Division reported that through Thursday, negotiated (cash) fed steers were $2.00 to $7.00 per cwt. higher week-over-week. For Monday-Thursday, AMS reported the high end of the price range at $140.00 per cwt. The average fed steer cash price through Thursday was $136.25 per cwt., jumping $4.63 per cwt. week-over-week and up $12.28 compared to a year ago. Later this morning, AMS will report the full Friday and weekly average cash fed cattle prices. After eroding for several weeks, cash hog prices last week showed some signs of attempting to stabilize. At the bottom of this page is our weekly cash price and production summary.

Last week, the April Live Cattle (fed) futures price jumped $4.78 per cwt. (comparison using weekly average of the daily closing prices). Prices for contracts listed for the balance of 2017 also increased, for example the December 2017 contract was up nearly $3.00 for the week. Compared to mid-February’s level, the August Live Cattle contract has increased $14.50 per cwt. The May Feeder Cattle futures market contract price averaged $142.66 per cwt., up $2.76 for the week. Compared to mid-February, the May contract is now up $20.00 per cwt. and the September contract is $24.00 per cwt. higher.

Hog futures were about unchanged last week. The May Hog contract gained 12 cents per cwt. last week compared to the prior weekly average and the December contract slipped by 10 cents. Hog futures prices have been eroding since early February, but appear now be stabilizing. The summer contract months (June, July, and August) remained above the $70.00 per cwt. mark.

Graphically, today we highlight weekly cattle slaughter (note that slaughter data from USDA for the last two weeks are preliminary). Head slaughtered last week was the largest for any week since mid-November 2016. Last week’s slaughter level is indicative of the head packers need to process to fulfill their customers meat tonnage needs.

Now we turn out attention to the USDA-National Agricultural Statistics Service (NASS) annual Meat Animals Production, Disposition, and Income 2016 Summary (PDI) report, which was released last Thursday (the full report is 19 pages long and is available here). That report includes estimates on the animal value of production for two sectors: 1) cattle and calves; and 2) hogs and pigs. Those numbers are provided nationally and by state. Nationally, the 2016 value of US cattle and calves totaled $48.6 billion. That was a dramatic decline from 2015’s as it fell by $11.2 billion or 18.7 per cent. Animal marketing’s increased year-over-year so the value drop was all caused by lower cattle prices. The US value of hogs and pigs in 2016 was $17.2 billion compared to 2015’s level of $18.9 billion.

By state, in 2016, Texas retained its long standing position as having the largest value of cattle and calf production ($7.2 billion). Nebraska was second ($6.3 billion). Rounding out the top five states were: Kansas ($4.6 billion), Oklahoma ($2.6 billion), and Iowa ($2.5 billion). Those top five states represented 48 per cent of the US value of cattle and calf production.

Looking at hogs by state, the 2016 NASS PDI report showed the leading state continued to be Iowa ($5.5 billion). North Carolina ($2.1 billion) came in second followed closely by Minnesota ($2.0 billion). Also in the top five states were Illinois ($1.1 billion) and Indiana ($916 million). Together those five states comprised 68 per cent of the US total value.


Daily Livestock Report - Copyright © 2008 CME. All rights reserved.


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