Livestock Comments By Dr. Andrew P. Griffith

By Dr. Andrew P. Griffith

FED CATTLE:

Fed cattle traded $1 lower on a live basis compared to last week. Prices on a live basis were $146 to $148 while dressed prices were mostly $236 to $238. The 5 - area weighted average prices thru Thursday were $147.08 live, down $2.24 from last week and $234.70 dressed, down $5.59 from a week ago. A year ago prices were $125.23 live and $200.00 dressed. Feeders have been getting their piece of the pie plus some the past few months while packers have been reeling in large losses with every pound of beef processed and shipped.

However, the leverage may be starting to show signs of shifting from the feeder to the packer as packers were able to purchase cattle on a lower market. The slight decline in prices is not a deal breaker for feedlot managers as they have been capturing the majority of the margin that feedlots and packers sometimes share. Lower prices will certainly result in a margin reduction of feedlots, but it is a long way from placing closeouts in the red. On the other hand, the small price decline will give packers a little momentum on the cost re- duction side to improve margins

BEEF CUTOUT:

At midday Friday, the Choice cutout was $226.10 up $0.22 from Thursday and up $3.83 from last Friday. The Select cutout was $215.08 down $0.35 from Thursday and up $2.12 from last Fri- day. The Choice Select spread was $11.03 compared to $9.31 a week ago. Packers got the best on both ends of their margin this week as slaughter cattle prices declined and wholesale beef prices escalated. The de- cline in fed cattle prices reduced costs and the increase in beef prices increased reve- nue which will be beneficial in improving packer margins.

The late Easter holiday has likely contributed to some of the pressure beef markets have been witnessing the past few weeks as retailers have been fea- turing more traditional Easter meats such as pork. As Easter succumbs to time, beef movement is likely to pick up as retailers and restaurants gear up for grilling season with Mother’s Day and Memorial Day in the coming weeks. Beef prices seasonally strengthen in late April and early May which is expected again this year, but they are not expected to exceed previous highs set in the first quarter of the year. The Choice Select spread is expected to widen the next couple of months, but it may not widen as much as usual as reduced cow slaughter may lead some “cow meat” buy- ers into the Select meat market to fill con- tract orders

Source:ag.utk.edu