CAB Insider: Market Update
The cash fed cattle market continued on a roll during the week beginning April 17, with steer prices averaging $178.12 per hundredweight (cwt), just $0.83 lower than the prior week’s record.
The north to south regional price spread remains intact as packers buying for northern plants continue to battle to own the small market-ready inventory on feedyard show lists. As a result, northern trade at $180 per cwt live or $288 per cwt dressed was dollars higher than Texas live bids in the $174 to $175 per cwt range.
Cattle on Feed Report
surprises analysts
The April 21 Cattle on Feed Report surprised analysts with a cattle placement number much higher than the top of pre-report estimates. March placements were down less than one percent from a year ago, with a boost from Nebraska feedyards for the month.
With placements above expectations, feedyard inventories are still 4.5 percent smaller than a year ago and 2.5 percent under the five-year average.
Large March placement volume had little bearish impact to the cattle market early in the week beginning April 24. Rightfully so, beef production volume is down due to smaller weekly slaughter totals and lighter carcass weights.
Although fed cattle didn’t mark another record high during the week beginning April 17, boxed beef values pressed sharply higher.
CAB cutout
premiums narrow
The Certified Angus Beef (CAB) cutout was $5.73 per cwt higher, with Choice up stronger at $8.64 per cwt. Select advanced just $5.26 per cwt, widening the Choice/Select spread to $19.38 per cwt. This is $4.50 per cwt beyond the price gap seen a year ago.
The CAB cutout premium narrowed to just $12.75 per cwt over Choice, down $2.91 per cwt on the week. This positions some CAB cuts at a more attractively priced upgrade to commodity Choice, important in a pricing climate which is eight percent higher than a year ago.
Across the CAB carcass report, it’s the thin meats that continue to advance the most aggressively to higher prices. Flank steaks, outside skirts and inside skirts are easily at their record price point for this time of year. There’s room for those to move higher based on historical spring demand patterns and supply.
In the past 30 days, CAB tenderloins have increased $1.53 per pound to average $16.70 per pound wholesale. The direction will likely continue upward for this item with limited supply available.
All in all, wholesale beef movement has slowed in the current market as price points push buyers back from aggressive procurement. The buying pattern shows much smaller volumes for delivery several weeks out, as price points for future delivery are showing steep premiums.
Mindful breeding of
heifers on hand
Breeding heifer retention has thus far not been a major factor in 2023, as indicated in the data.
The heifer slaughter pace continues to run high, at less than one-half of a percent smaller than a year ago through mid-April. The heifer share of fed cattle slaughter year-to-date has run 40.8 percent of the total, versus 40 percent in 2022 – an aggressive proportion, historically.
Projections are for beef cow numbers to end the year slightly smaller again in 2023, further fueling the potential for high replacement female values in the future. Yet, severe to extreme drought conditions remain in place from Nebraska to central Texas, encapsulating large portions of four of the top 10 cow/calf states.
Simultaneously, CAB has observed yearling breeding heifers this spring fetch enviable prices as some cattlemen are either restocking their own herds or speculating bred females will be profitable inventory to trade in the fall.
Those artificially inseminating (AI) heifers in the next couple of months may do well to consider the genetic advancement which can be made through remarkable calving-ease Angus bull selections.
Reviewing both private and commercial AI offerings currently on the market reveals multi-trait excellence in a variety of bulls.
Some have highlighted the progress in perhaps the past five years regarding stud bulls with an appealing physical phenotype, combined with top percentile expected progeny differences (EPDs) in a multitude of traits.
Furthermore, there are plenty of sires excelling in EPD rankings for a variety of maternal, production and carcass traits to advance the goals of the cow/calf and feedyard sectors.
If genetic focus includes quality carcass outcomes in the future, then the marbling genetic trend in the Angus breed is on track to deliver results.
Since CAB recommends Angus bulls with a +0.65 marbling EPD and +$55 $Grid index to position future calf crops to achieve 50 percent or higher CAB acceptance, there are plentiful sires recently born which fit the Targeting the Brand mold.
As producers contemplate the future impact of today’s genetic decisions, they should consider the marketability of both feeder calves and potential replacement heifer progeny.
Paul Dykstra is the director of supply management and analysis at CAB. He can be reached at pdykstra@certifiedangusbeef.com.
