Prime Cuts will be off for the next two weeks. Happy Holidays to our customers and friends!
COMMENTARY BY TREY FREEMAN & ABBY GREIMAN
Cash fed cattle traded $228 per hundredweight in the North this week, steady from the week prior. Dressed trade occurred at $357 per hundredweight, up $2. Trade in the South wasn’t active as of midday Friday, but we see bids of $228 per hundredweight being passed.
USDA estimated this week’s slaughter to be 587,000 head, down 9,000 from the week prior and down 29,000 from a year ago.
The choice boxed beef cutout averaged $358.67 per hundredweight, $0.70 lower. Softer cutout prices (down 5% over the past seven weeks) reflect ramped-up slaughter noted over the previous two weeks. This week, strength in end meats helped to offset much of the weakness in middle meats. The shift in demand from middle to end cuts is seasonal, typically lasting into the first part of the year, and netting softer boxed beef values deep into February.
On the retail front, data showed two trends continuing in November: retail beef prices rising and consumers buying more. Data from the US Bureau of Labor Statistics showed ground beef averaging $6.54 per pound, a new record high and 16% above year-prior levels. All beef steaks averaged $12.29 per pound, up 15% year over year. Meanwhile, according to Circana, retail fresh beef sales volume increased 4% compared to November 2024, making it 17 months in a row with more pounds moving across scanners.
USDA’s APHIS on Thursday updated its website that tracks Mexico’s New World Screwworm detections within 400 miles of the US. Half of the 12 bovine animals detected with NWS last week were calves under 10 days old, suggesting these animals weren’t brought in from another area.
After a sideways trade through mid-week, live cattle futures weakened on Thursday. Futures rebounded Friday in front of the monthly Cattle on Feed report. Live cattle futures finished the week with gains across the board of $0.60 to $1.30 per hundredweight. Heavy resistance continues lurk on the bottom side of the gap from the last week of October. A close over the 100-day moving average of $231.95 per hundredweight in February live cattle opens the door to higher prices. Support below sits at the 50-day moving average of $227.75 per hundredweight.
Feeder cattle futures finished the week with gains of $3.275 to $6.50 per hundredweight, with the greatest gains posted in the nearby contracts. Feeders managed to pierce the gap left over from late October but failed to fill them on their respective charts. January feeders finished the week at $345.60 per hundredweight. Meanwhile, the latest 7-day CME Feeder Cattle Index stands at $350.05.
The December Cattle on Feed report released Friday was mostly in line with expectations. Cattle on feed on December 1 came in at 11.727 million head, equal to 97.8% of last year’s total, compared to the average trade estimate of 98.3%. Cattle marketed in November came in at 88.2% of last year, right in line with expectations for 88.4%. November placements looked like the only outlier: 88.8% of last year, compared to the consensus call for 92.4%. This still falls into the range of pre-report estimates, which is always the widest for placements compared to other metrics. In terms of regionality, the gap in on feed numbers continues to widen between the North and the South, as states such as Iowa, South Dakota, Kansas and Nebraska have numbers over last year, while Texas, Oklahoma, Colorado, and Arizona continue to fall well under last year. Overall, the tone of the report is neutral to slightly friendly on the lower placement numbers.
Cash fed cattle should be steady next week. As for futures, Friday’s slightly friendly Cattle on Feed report may be the catalyst needed to fill the gaps left over on the chart from late October in live and feeder cattle. However, the gap in feeders is notably large, making it difficult to fill. As one client phrased it, the gap is “large enough to fit an 18-wheeler sideways.” Should feeder futures fill the gap, it will be imperative that cash feeder markets are hot on the futures market’s heels.
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