Oklahoma Water Resources Center

Fed cattle markets may be past the summer doldrums

STILLWATER, Okla. – Though the continuation of 100 degree Fahrenheit days may indicate that summer is far from over, producers may have hope that fed cattle markets are past the worst of the seasonal doldrums.

“Fed cattle prices have increased approximately $4 per hundredweight from late July,” said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist. “Many analysts projected the surge and it appears as though the late May cattle prices may hold as the lowest of the season.”

However, the market is not completely out of danger yet. Choice boxed beef prices have decreased to approximately $172 per hundredweight, close to June’s lowest prices.

“This means that most of the recent increase in fed cattle prices has come at the expense of packer margins and further increases will depend on boxed beef price recovery,” Peel said. “On the other hand, additional weakness in boxed beef prices could potentially pressure fed cattle prices lower once again.”

The recent decrease in boxed beef prices has been more severe for Choice grade meat compared to Select grade, resulting in an unusually narrow Choice-Select spread for this time of year, approximately $3 per hundredweight.

“This is indicative of the continued weakness of Choice grade meat demand and the struggles to rebuild demand for the ‘middle meats,’” Peel said.

Feeder cattle markets continue to show somewhat surprising strength, especially given the harsh weather conditions present this summer. Calf prices have been pressured a bit by unusual drought-related runs of early weaned calves but are still above the low prices of May.

“Many of this fall’s calves have already been marketed this summer,” Peel said. “Heavy feeder price increased to new seasonal highs in early July and are still holding at remarkably strong levels. The rollback between calf and feeder prices is very narrow; almost zero in some cases, resulting in very high stocker value of gain.”

For example, the Oklahoma combined auction price the first week of August put 515-pound steers (medium to large, No. 1) at $138.56 and 727-pound steers at $138.05. This implies a value of gain of $1.37 per pound for 212 pounds of gain. For 825-pound steers, the price is $132.50 per hundredweight resulting in a value of gain of $1.22 per pound for 310 pounds of gain.

“Wheat pasture prospects in the southern Great Plains appear very poor at this point but the market is clearly encouraging somebody, somewhere that has forage to put stocker gains on feeder cattle,” Peel said.

Cull cow prices in Oklahoma have decreased approximately $8 to $10 per hundredweight in the past month. The runs of cows and bulls in Oklahoma auctions continue to be large. During the week of August 1, the auction total for cows and bulls was 3.5 times the volume of the same time last year.

There continue to be bottlenecks of animals, with many auctions unable to handle the volumes of cattle in weekly runs. Cattle trucks are booked well in advance and the cow slaughter plants have coolers and freezers bulging with recent production.

“The drop in cow prices appears to be mostly a logistical issue,” Peel said. “The underlying cow beef market is still quite strong. The pressures are very regional and temporary. I expect to see some of the recent price drop bounce back as soon as the logistical bottlenecks abate somewhat.”

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REPORTER/MEDIA CONTACT:
Donald Stotts
Communications Specialist
Agricultural Communications Services
143 Agriculture North
Oklahoma State University
Stillwater, OK 74078-0001
Phone: 405-744-4079
Fax: 405-744-5739
Email: donald.stotts@okstate.edu

Oklahoma State University, U. S. Department of Agriculture, State and Local governments cooperating; Oklahoma State University in compliance with Title VI and VII of the Civil Rights Act of 1964, Executive Order 11246 as amended, Title IX of the Education Amendments of 1972, Americans with Disabilities Act of 1990, and other federal and state laws and regulations, does not discriminate on the basis of race, color, national origin, gender, age, religion, disability, or status as a veteran in any of its policies, practices, or procedures, and is an equal opportunity employer.

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