May 5, 2016 







Cash Cattle. Bids finally surfaced and were lower as expected. Bids of $190 dressed in the north were refused. Cattle owners seem less willing to turn over this week and mid week bids are unlikely to attract any sellers. Packers once again would like to confuse trading by bidding on cattle for June delivery hoping all the transactions are confused with sales for next week.


Cattle Futures. Early trading made the futures look like they were going to stall out. Late day trading revived the advance upward for futures and June led the way with a triple digit gain.  Technical signals also were supportive to further advances.   


Carcass weights released for the week of April 16th showed a 2 pound decline in steer weights. This is a continuation of seasonal trends but has failed to fall as fast as most experts forecast. Steer weights remain 14# above last year. Carcass weights and the tonnage associated with the carcass weight reports are a key factor in setting the tone for the cutout and assessing beef demand.


Forward Cattle Contracts: Cattle forward contracts bought for May delivery are well under last year. Packers sensing tight supplies in May and June are attempting to remedy that condition by adding more forward contracts. Current bids at $192 dressed for late May vs. $6 over the May board.


The weekly breakdown of fed cattle moving to the beef processing plants is as follows. 1) formulas 55%; 2) negotiated 25%; 3) forward contracts 20%.


The Cutout. Boxed beef prices were lower but seem to be looking for a floor and if they are able to find a bottom, many believe we will see the cutout work higher. Lower prices for the cuts is seen as positive signal for retailers to sponsor specials in the coming weeks.



Choice CutoutChoice Price Change
204.74Down $1.20
Select CutoutSelect Price Change
195.65Down $1.37
Choice/Select Spread


Oklahoma City. Early week auction results were reflective of recent pessimism and prices were mostly steady to weak. Prices in auctions and the country continue to react to negative futures and losses in almost all segments of the beef pipeline. Many handy weight feeders were selling in the low $140s with heavier steers dipping into the $130s. Calves also suffered losses as most summer grazing demand is waning and breakevens for fall call for much lower prices.


Feeder futures were able to stay in the plus column assisted by the large drop in corn futures. Traders will be keeping one eye on the fed cattle and the other on corn prices. Feeder futures are one of the lightest traded contracts and volume on one side or the other tends to push them around.


Feeder Cattle Cash Index. May is the spot month and now will set a new barometer against the index.   


The National Weekly Feeder Summary released on Friday of each week tracks the national prices by region for last week.   


Corn futures. Corn futures gave up additional ground at mid week. This year's corn crop is now 45% planted. Farmers who have been searching for a bail out on this summer's crop are focusing on futures for an entry point for hedges. The basis is currently around 30 over the May contract in Guymon Oklahoma and is softening.  Corn is now pricing into rations at $7.00 cwt. in the Oklahoma Panhandle.






Denmark proposed a tax on all beef sold in the country in order to discourage beef production and consumption. The tax was an offset to their notion of the contribution cattle raising made to global warming from cattle as methane producers. Bill Gates, the Microsoft founder, also has weighed in saying he will be eating less red meat in order to make a small impact on global warming.


Global warming is an issue that requires action on the part of humans but targeting animals used for food is a misdirected start. The consensus among expert nutritional opinion is beef serves an important role in a balanced diet and as a source of iron, zinc, raboflavin, and other important nutrients, it should remain an important part of every diet.


The beef industry depends on the good will of young folks who will grow to become the future buyers of beef products or not as their education dictates. Beef gets a bad rap on college campuses across the nation. That needs to change and opinion makers need more and better information from scientific experts to carry the message of the value of beef in the diet.


Localavores are a part of the food reform movement who would like to tax any food not raised within 50 miles of the grocery store. This leaves many residents in desert centers like Phoenix wondering how they are expected to grow local foods. This movement insists on locally grown beef and ignores the realities of today's beef production and the value of aging on the beef product.


The difficulty of getting beef's message out in the media is a challenging one. The industry must rely on elite universities whose opinions matter to the press and influence tracks with opinion formers in the country. The check off dollars must be used strategically to promote and educate.









Sections of the newsletter are redesigned with hyperlinks to the appropriate source pages. The hyperlinks are in light blue within the report.










Regional differences in grain and cattle basises create a difficulty in modeling a national composite for current close outs or a proforma forward look at a breakeven. Readers should consider your own area for adjustments to these models. 




The Cattle Report introduces the FEEDER METER. The report estimates profit or loss for currently purchased feeder steers and projects a result 150 days out.  The chart is interactive and updated every 15 minutes in real time based on changes in futures markets in grain and cattle. Corn basis information is based on current trade prices adjusted every two weeks. Feeder prices and fed cattle sales are par the appropriate futures contract.

750 # Feeder Steer1,109.25147.90
Cost of Gain 600 pounds505.730.84
Estimated Interest(Prime + 1%)30.45 
Current Breakeven1,639.19121.42
Current Futures1,578.56116.93
Net Profit / Loss-60.64-4.49


The Cattle Report estimates current profit or loss on cattle placed on feed 150 days ago. This report generated from industry averages attempts to simulate a typical close out based on prevailing purchase prices for a feeder steer 150 days ago. The close out assumes grain was purchased at market each month. Selling prices and interest rates are based on prevailing benchmark quoted prices. This chart will change weekly.

750 # Feeder Steer OKC 150 days ago1,425.00190.00
Cost of Gain 600 pounds519.020.87
Estimated Interest(Prime + 1%)31.15 
Resulting Breakeven1,975.17146.31
Current Texas Panhandle Cash1,673.06123.93
Net Profit / Loss-302.12-22.38

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