Ag Center Cattle Market Report & Analysis

<p id="block-a2389dc5-71fb-4368-8345-f2ec6b860fbc" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><strong style="box-sizing: inherit; max-height: 1e+06px;"><font face="arial" style="background-color: rgb(255, 255, 255);">May 10, 2022</font></strong></p><p id="block-690f722c-5c50-4842-afdf-84345a5f3f6f" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">CATTLE MARKET REPORT AND ANALYSIS</font></p><p id="block-08759e8b-43ab-45dc-a01f-c5048e89688b" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><a href="https://www.ams.usda.gov/market-news/regional-direct-slaughter-cattle" style="box-sizing: inherit; max-height: 1e+06px;"><font face="arial" color="#000000" style="background-color: rgb(255, 255, 255);">Cash Cattle</font></a></p><p id="block-c2d5674f-8f8b-44dd-8b2f-2bac4815d22c" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">Monday morning broke with a continuation of falling futures prices before news of sharply higher box prices reached the marketplace. The turn around in the front end of the futures set the stage for this week?s standoff between sellers who are holding for steady prices and processors eager to improve margins. This week will pit the pessimistic view of a squeezed household budget vs. a kick off of springtime increase in demand.</font></p><p id="block-c2d5674f-8f8b-44dd-8b2f-2bac4815d22c" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">Sales this past week were mostly at steady prices of $145-147 live and $232 dressed in the north. Cattle in the south traded at $140 in Texas and $140?141 in Kansas.</font></p><p style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">This week?s slaughter at 657,000 head topped last week?s 649,000 head and was 20,000 head more than prior year. The large volume took a toll on box prices and processor margins, but profits at the plants will remain well above historic averages. The weekly slaughter size will determine the current status of fed supplies. Slaughter volumes in recent weeks have faced revision by USDA as daily volumes change with the price and demand sensitivities day by day.</font></p><p style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="http://www.cmegroup.com/trading/agricultural/livestock/live-cattle.html" style="box-sizing: inherit; max-height: 1e+06px;">Cattle Futures</a>. Futures were mixed after a sharply lower opening. The front end responded to better news from the cutout while the deferred contracts yielded to economic concerns.</font></p><p style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"></p><p id="block-213a6cf7-8848-47dc-b5be-6dfc895d02db" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="https://www.ams.usda.gov/mnreports/ams_3492.pdf" style="box-sizing: inherit; max-height: 1e+06px;">Benchmarking</a>. On Tuesday of each week, USDA releases a weighted average price report for all cattle sold the previous week. The report summarizes the distributed price levels for each category of sale such as Negotiated/Formula/Forward Contracts. Beef producers are able to measure the marketing price for their cattle compared to the national averages.</font></p><p id="block-3a527fb0-3476-45d2-9ec5-51cf8a199914" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">The&nbsp;<a href="https://www.ams.usda.gov/mnreports/ams_2700.pdf" style="box-sizing: inherit; max-height: 1e+06px;">Comprehensive Fed Cattle Weekly Report</a>&nbsp;offers the most current information on the current status of fed cattle being harvested. The report is published each Tuesday and includes the previous week?s change in carcass weights and quality grading. The latest report shows carcass weights down 3# at 870#. Weights are 13# over prior year. The combined steer and heifer weights can easily be influenced when the proportion of steers to heifers in the weekly slaughter changes. Quality grade fell .8% to 80.9%.</font></p><p id="block-cdd71a86-4fa0-47b4-bcb5-76846ca0f63d" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="https://www.ams.usda.gov/mnreports/ams_2480.pdf" style="box-sizing: inherit; max-height: 1e+06px;">Forward Cattle Contracts</a>:&nbsp; Forward contracts will always bear some relationship to the corresponding futures month closest to the delivery month for the cattle. Basis levels will move up and down as processors want to add to forward contracts or not. The driver in forward purchases of cattle will always be forward sales of beef. Packers will always be willing to take a price risks off the producers plate in return for an extra margin.&nbsp;</font></p><p id="block-c889d984-aa16-4a66-891e-0b32eb47a1c3" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="https://www.ams.usda.gov/mnreports/lsddcbs.pdf" style="box-sizing: inherit; max-height: 1e+06px;">The Cutout</a>. The choice cutout posted a $3 gain to start the week. Demand has been limited to the end meats and grind or lower priced cuts of beef that have proven to enjoy strong demand. Ribs have taken a big hit along with the middle meats more expensive cuts.</font></p><p id="block-af30cf4d-fe04-4340-b020-1baf1c72a394" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">Packer margins have suffered as fed prices hold their ground while beef cuts decline in price. The normal pattern is for packer margins to improve into the summer months as demand for beef rises. Margins remain around $150/head. The processors have been careful not to take the slaughter number too high cleaning up front end supplies and pushing boxes lower but tailoring the slaughter number to the demand for cuts.</font></p><p id="block-dcd02dc1-79d1-4976-aad8-d8ff59297ae8" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="https://www.ams.usda.gov/mnreports/lswbfrtl.pdf" style="box-sizing: inherit; max-height: 1e+06px;">Beef Feature Activity Index.</a>&nbsp;Price competition will determine the role of beef in spring meat features. Dollar for dollar, pork is probably the best buy. Buying habits are important and most consumers return to beef as the preferred meat after chasing the bargains.</font></p><p id="block-4f8a531a-49b6-44b1-abc9-0a89f1b9460e" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><strong style="box-sizing: inherit; max-height: 1e+06px;"><font face="arial" style="background-color: rgb(255, 255, 255);">Replacement markets</font></strong></p><p id="block-4eb0b041-903c-474d-86ba-dc5d1d1974c3" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">Improving moisture conditions, in parts of the country suffering, will allow some changes in marketing plans as operators attempt to capitalize on the premiums built into the deferred futures market for feeder cattle. Heat and wind can quickly deplete the moisture. The first signs of improving pasture conditions should be a decline in the number of cull cows hitting auction markets across the country. Price signals are telling stocker operators to wait to market cattle and market them at heavier weights. Holding cattle to market them later is not an easy task. Short availability of grazing means cattle must be supplemented with high priced feed. The sharp staircase upward in feeder futures promises large increases for replacement cattle in the future but many of those premiums evaporate with high feed costs.</font></p><p id="block-398600e8-fa0e-46da-8777-6466acfcb363" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="https://www.ams.usda.gov/mnreports/AMS_1280.pdf" style="box-sizing: inherit; max-height: 1e+06px;">Oklahoma City</a>. ? Prices were higher on heavy [800#+) feeder cattle and $2 lower on light weight feeders and calves worked higher with rains across much of the trade area. The price of feed is working into the choices by feedlots of placement types and weights.</font></p><p id="block-34528486-452c-47a8-93c1-457c87e8cf71" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="https://www.ams.usda.gov/mnreports/ams_1281.pdf" style="box-sizing: inherit; max-height: 1e+06px;">OKC West</a>&nbsp; ?</font></p><p id="block-bfcf4811-2a0e-4226-b09b-c42952601661" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="https://www.cmegroup.com/trading/agricultural/livestock/feeder-cattle.html" style="box-sizing: inherit; max-height: 1e+06px;">Feeder Cattle Futures</a>. Feeder futures, except the spot month, were weak. Traders are forecasting the next move in cash feeder prices will be higher.</font></p><p id="block-5bfa9853-4b66-44b5-8840-0cc7cb9f978c" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="ftp://ftp.cmegroup.com/cash_settled_commodity_index_prices/daily_price/FCLRP.txt" style="box-sizing: inherit; max-height: 1e+06px;">Feeder Cattle Cash Index</a>. The index is tracking the moves in cash prices. &nbsp;&nbsp;</font></p><p id="block-987ad7bf-7826-470c-91d0-cb5d19156f32" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="https://www.ams.usda.gov/market-news/feeder-cattle-internet-video-reports" style="box-sizing: inherit; max-height: 1e+06px;">Video and Internet Replacement Cattle Auctions</a>. The movement from traditional private treaty sales to Internet auctions has been slow but steady. Producers have chosen this option as the primary marketing tool for most of the cattle offered in the replacement markets.</font></p><p id="block-b7968674-f137-4a0b-be65-ee147fe19634" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="https://www.ams.usda.gov/mnreports/sj_ls850.txt" style="box-sizing: inherit; max-height: 1e+06px;">National Weekly Feeder Summary</a>&nbsp;released on Friday of each week tracks the national prices by region for last week.&nbsp;&nbsp;&nbsp;</font></p><p id="block-6c151908-dae1-4522-8771-5d533e39c68e" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);"><a href="https://www.cmegroup.com/trading/agricultural/grain-and-oilseed/corn.html" style="box-sizing: inherit; max-height: 1e+06px;">Grain Futures.</a>&nbsp;Corn prices fell to open the week. Moisture and planting success in large areas of the corn belt got the new crop off to a good start despite falling behind last year and the previous 5-year average. Prices for rail cars is falling allowing some relief in the corn basis in the south. Guymon Oklahoma basis is $1.40 over the July contract.&nbsp;</font></p><h2 class="has-vivid-cyan-blue-color has-text-color" id="block-8d8678e7-fbf7-4fc4-8548-ab9c89b44fe1" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; margin: 0px 0px 1rem; font-size: 27px;"><font face="arial" style="background-color: rgb(255, 255, 255);">MANAGING WEIGHTS</font></h2><p style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">Cattle have run down sorting alleys as long as cattle have traded between buyers and sellers. Sometimes they are sorted for quality and sometimes for weight. Different weight cattle of the same quality sell for varying prices and uniformity of weight attaches a premium to the sale of a group of cattle.</font></p><p style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">Experienced cattle owners have developed skills for assessing the size, and until the past few years, most cattle were sorted in the alley based upon the visual look of the animal. Frame, age, and flesh, play a role in the evaluation of an animal. More recently load cells on processing chutes have removed the task from a subjective call to an objective number that places the animal in a particular weight class.</font></p><p style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">Enhancing the value for resale of the group is only one objective of uniform sizing. &nbsp;In the feedyard, weight control is critically important to the outcome of the group at harvest. Uniform pen weights and flesh will yield cattle at harvest that reach finish at the same time. This in turn improves quality grade, cutability, and carcass yield.</font></p><p style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">Feed prices have ratcheted up the importance and value of weight management. Targeting the proper marketing weight involves assessing the genetic potential as well as the harvest weight that optimizes quality grade. Weight mismanagement produces animals either over-finished or under-finished and both results carry penalties or fail to optimize pen results. The objective is not only hitting the right target weight but knowing the production cost to take the animals to the right weight. Too often people make a bad judgment and overfeed cattle adding exterior fat and not muscle.</font></p><p style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">Twenty-five years ago many of the research universities completed feeding trials attempting to define the exact cost at different levels of feed cost of adding another 100# to the finish weight. It might be time to dust off those studies and calculate the cost of gain for the last 100# with corn costing over $9 in many locations.</font></p><p style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"></p><p id="block-71b81daf-c099-47c5-8f39-38b695af12db" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"></p><p id="block-12bae8b4-45b2-41d0-acb8-5d44d028fce0" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"></p><p id="block-4a02565c-ac2c-4a21-a8ac-8eb9f9349bb1" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><font face="arial" style="background-color: rgb(255, 255, 255);">?</font></p><div class="wp-block-columns" style="box-sizing: border-box; max-height: 1e+06px; display: flex; margin-bottom: 1.75em; flex-wrap: nowrap; font-size: 19px;"><div class="wp-block-column" style="box-sizing: inherit; max-height: 1e+06px; flex-grow: 0; min-width: 0px; word-break: break-word; overflow-wrap: break-word; flex-basis: 50%;"><font face="arial" style="background-color: rgb(255, 255, 255);"><iframe src="https://www.agcenter.com/cattlereportchart.aspx?chart=choice_cutout" style="box-sizing: inherit; max-height: 75vh; width: 551px; min-height: 55px; height: 55px; border-width: initial; border-style: none;"></iframe></font></div><div class="wp-block-column" style="box-sizing: inherit; max-height: 1e+06px; flex-grow: 0; min-width: 0px; word-break: break-word; overflow-wrap: break-word; flex-basis: 50%; margin-left: var(--wp--style--block-gap,2em);"><font face="arial" style="background-color: rgb(255, 255, 255);"><iframe src="https://www.agcenter.com/cattlereportchart.aspx?chart=select_cutout" style="box-sizing: inherit; max-height: 75vh; width: 551px; min-height: 55px; height: 55px; border-width: initial; border-style: none;"></iframe></font></div></div><h2 id="block-573e0ddc-725d-4da7-b391-3755a41b3cae" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; margin: 0px 0px 1rem; font-size: 27px;"><font face="arial" style="background-color: rgb(255, 255, 255);"><br></font></h2><p id="block-4122b7d6-fc8c-4a02-b924-d92f81b3ae80" style="box-sizing: inherit; max-height: 1e+06px; overflow-wrap: break-word; letter-spacing: 0.5px; margin: 0px 0px 1rem; font-size: 19px; line-height: 1.6;"><strong style="box-sizing: inherit; max-height: 1e+06px;"><font face="arial" style="background-color: rgb(255, 255, 255);">FURTHER NOTES AND EXPL