By Derrell Peel
With boxed beef prices down sharply from the second rollercoaster high of the year, fed cattle prices may have peaked seasonally. Fed prices are currently holding mostly steady near $150/cwt. but will likely decrease into May as fed cattle marketings increase seasonally. Cattle slaughter typically increases from April through May to seasonal peaks in June. Fed cattle prices typically decrease from April peaks to summer lows in July.
Average price change from current market levels would suggest that fed prices could drop to around $140/cwt. by July. Given some bunching of placements in the past couple of months, it would not be surprising to see fed prices drop into the mid $130s, at least briefly, for a summer low. Beef demand, as expressed by wholesale and retail beef prices, will be key through this seasonal supply increase.
Feeder cattle prices have been holding strong as well but are showing signs of weakening from the current peaks. Several factors may contribute to weaker feeder prices in the coming weeks. Persistent drought conditions and delayed spring temperatures are both contributing to growing concern about forage conditions.
The clock is ticking on spring pasture and hay development and another 2-4 weeks of delay will limit summer grazing demand and may force some producers move defensively to ensure forage demands can be met. At the same time, delays in corn planting, along with USDA estimates for smaller corn acreage and tighter old crop corn supplies have firmed corn prices. The corn market will be closely watching weather conditions from now on and corn market volatility could add to feeder price pressure.
Slaughter cow prices have pulled back slightly from record levels in the past week or so. This is earlier than the typical May peak in slaughter cow prices. Looming prospects for poor forage conditions could result in counter-seasonal increases in cow culling in coming weeks, much as happened last year in the first half of the year.
Thus far, demand for replacement heifers and breeding cows has been strong, especially in the central and northern Plains. Only slight increases breeding female demand have been noted in the Southern Plains this spring, where drought conditions have been more prevalent, and the demand appears to be diminishing rapidly.
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