Winter weather (that just wonít stop) matters to cattle markets
From a market perspective, this winter has been somewhat of a double-edged sword.
Nevil Speer, BEEF Magazine
Mar 06, 2019
Weather, weather, weather Ė itís THE story of the past several months. It doesnít matter where you go, most everyoneís tired of winter. If you havenít been fighting cold, snow and wind, youíve been fighting rain, mud and gray. All of which made February, the shortest month on the calendar, seemingly an especially long month.
The influence of winter has definitely been felt by the feeding sector. Many feedyards have had their fair share of tough feeding conditions. As a result, closeouts have been challenged by reduced performance during the past 30-60 days. Thatís best evidenced by the sharp decline in slaughter weights in recent weeks (Figure 1).††††
From a market perspective, this winter has been somewhat of a double-edged sword. On one hand, itís added some additional support underneath the market.
Fed prices finished January at $123-124 per cwt. From there, the market stepped up to $125 by mid-month, added another $1 the following week and finished out the last week of business with some $128-9 trade Ė that put cattle feeders ahead of last yearís mark at this time (Figure 2). But on the other hand, wide-ranging winter conditions have also hampered commerce.†
Meanwhile, cattle feeders continue to be challenged by several factors when it comes to marketing leverage. First, beef production and supplies remain ample. Thatís largely the result of bigger year-over-year production heading into the holidays.†
Weekly beef production peaked at nearly 528 million pounds (on a moving average basis) in 2018 versus 520 million pounds in 2017 (Figure 3). As a result, beef inventories in cold storage at the end of December were running ahead of both last yearís stocks and the five-year average.
Meanwhile, as noted above, winterís influence also slows down beef purchases from end-users Ė boxed beef sales during the five weeks between Christmas and the end of January were behind last yearís pace by just over 260 loads. That trend finally reversed during February and helped boost the market in recent weeks.
Second, feedyards are still front-end loaded. Decemberís 120-day plus on-feed population totaled 3.64 M head Ė the largest December mark in the series history (Figure 4). Given the pace of marketings thus far, the official January number will also likely rival the historical record.
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