Volatility aside, March turned in solid fed cattle trade

Should the spring high in fed cattle been higher? Hereís a look.


Nevil Speer, BEEF Magazine

Apr 10, 2019


With April in front of us, there still is some hope for a stab at a new spring high in the fed cattle market. But donít hold your breath.†


Thatís especially true given that the month opened on a softer note Ė down $1 per cwt from the previous week, and that drop followed a $2-3 slide the week before that. Despite that, March proved to be a fairly solid month for fed trade.†


Steers and heifers traded mostly $127-128 per cwt during the first three weeks of March. Then cattle feeders garnered another $1-$2 to jump the market up to $129. That all came as the Choice cutout began to push up against $229.


But then came USDAís Cattle on Feed report.†


Traders interpreted the report as mostly bearish. With that occurrence, cattle feeders were aggressive sellers the last full week of March. Accordingly, fed prices retreated $2-$3 to close out the month at mostly $126.


That move violated the upward channel thatís been in place since last September. And as noted above, Aprilís first week followed through by retreating another $1. Therefore, spring highs look to be in for 2019.†††


Thatís disappointing for some observers and analysts, who have been grumbling that the fed trade languished during the first quarter. Most notably, they point to weather and concerns about Chinaís problems with African swine fever Ė those factors should have been more supportive for the cattle market.


In other words, they contend this yearís market should have eclipsed last yearís $130 mark. Letís look deeper at those concerns.†


All-in, the fed market averaged $128 during March. So, while fed prices didnít reach last yearís $130, that $128 average is $2.50 better than last yearís March average Ė and on bigger kills (Figure 1).


More important, fed prices are nearly equal year over year through the first quarter Ė despite weekly beef production running just slightly ahead of last yearís pace. Lastly, Aprilís open at $125 is $8-$9 better versus last year.


The marketís year-over-year performance is even more significant...


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