Improvement

By Cassie Fish, http://cassandrafish.com

FI cattle and hog slaughter is finally on the upswing as plant productivity improves. Expectations for this week’s cattle slaughter is now 540-550k compared to 499k a week ago and 647k a year ago while the hog slaughter will push 2.21M head, above a year ago.

Pork is stealing the retail protein feature space this week with lots of ribs for Memorial Day on sale. Expect a lot of competitive pressure from pork and chicken over the coming weeks and months due to much cheaper wholesale prices and greater availability. Beef will have to fight it’s way back into spotlight over the summer as retail prices will stay high. Retailers will want to see a much larger and consistent beef supply and wholesale prices another 30-40% lower before comfort returns and results in featuring beef.

Wholesale beef prices for the week are down $68 on choice, led by plunging ends and trim. Expect wholesale prices to trend lower for an extended period of time, the market hitting a few plateaus as it returns to sub-$300.

Negotiated cash cattle trade this week is steady with last week. One packer only has paid $120 in at least 5 states and $190 dressed, though the volume is small. The remainder of cattle that have trades, which is in the north, have mostly sold for $180 dressed as feeders focus on getting cattle harvested. This morning’s on-line sale saw no trade.

CME cattle futures haven’t been impressed with the cash cattle action and have spent the day red with only spot Jun LC supported by its discount. The consolidation pattern continues, volume is light and open interest is low.

There is a USDA Cattle-on-Feed report Friday that will show a big drop in placements and marketings for the month of April thanks to COVID-19. It is not expected to be a market factor. Talk that May placements will be up slightly from a year ago, on the other hand, is bearish as those cattle are being placed right on top of cattle that will be back logged. This fact will make it virtually impossible for the industry to dig its way out of large number of backed up cattle that will be with the industry the remainder of 2020. Hog and chicken supplies will be more-than-ample in Q3 and Q4 too and heavy hog and cattle carcass weights will inflate production.

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