Cattle on Feed Report Leans Bullish  

  • Nearby live cattle futures closed at $181.48 per hundredweight, up 1.4% on the week, while feeders finished at $241.33, up 1.6%. 
  • Cattle prices finished mixed on Friday. Live cattle futures ended slightly higher; feeders pared their gains from Thursday. Still, they are making a nice recovery this week with no additional news on HPAI.  
  • The latest USDA Cattle on Feed report showed 11.84 million head in feedlots of 1,000+ in April, up 1.5% from a year ago. That fell below analyst expectations for a 2% increase. Placements in March totaled 1.75 million head, 12% below 2023. Marketings of fed cattle during January totaled 1.71 million head, slightly below 2023.  
  • Weekly beef export sales added up to 17,700 metric tons, up 30% from the previous week and up 27% year-over-year. Shipments: 16,700 metric tons, up from 13,900 from a week ago and slightly higher than a year ago. Increases were primarily for South Korea, China, and Japan.

Commentary by Matt Wolf & Dan Johnson

Late first quarter placements will typically see harvest toward the fourth quarter of the year. With March activity down 12% year-over-year, you can put together a strong story for higher fat cattle prices this fall if external factors don’t influence the markets. 

Something to note for nearby cattle: Nearly five million head have been on feed for 120+ days. Those animals have elevated weights.

Working through these cattle in the weeks ahead will be important. A drop of 13% year-over-year in marketings in March lowers the likelihood of that happening.

US Beef Imports Rise

US imports of Brazilian and Australian beef keep rising. This makes sense given the US cow herd is low, beef prices are high, and the US dollar has been strong.

For the first two months of the year, USDA data shows beef and veal imports running more than 30% ahead of year-prior levels.

Volume from Brazil has been especially impressive. Activity has been picking up since 2020 when the US eased restrictions on fresh beef imports from the country.

USDA data shows imports of beef and beef products from Brazil totaling 128,452 metric tons in 2023, up 117% from 2020. Shipments from Brazil tend to start strong each year as exporters seek to take advantage of lower tariff rates on the first tier of volume to cross the border. 

For the first two months of 2024, USDA reports imports at 70,414 metric tons up 43% from the same period last year. As of February 12, USDA said traffic was at 85% of first tier quota.

Currency Advantage

A weaker Brazilian Real has also likely helped pave the way for additional interest from US customers. Since the beginning of the year, the real has lost more than 7% versus the greenback. That means it takes fewer US dollars to buy goods denominated in Brazil’s currency.

Market participants should keep an eye on global trade much like other typical market conditions like feed prices, and boxed beef prices.

For assistance in what’s best for your operation, please reach out to our team to discuss strategies in depth. Give us a call!  

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