Ag News

Prices Rally, But COF Suggests Caution

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Packers wanted cattle and paid $2 to $5 per cwt higher this week. Southern feedyards sold at $130 to $132 and the northern cattle traded at $130 to $135 per cwt. The Choice beef cutout value was $217.16 on Friday, up $5.08 from the previous week. Select beef sold at $203.57, leaving the Choice/Select spread at $13.27.

Cattle slaughter is up 6% year-to-date, a trend reflected in Friday’s USDA Cattle on Feed report that teetered between bearish and bullish. On feed as of April 1 were 10.9 million head, 100% of year ago. Placements in March totaled 2.1 million, 11% higher, while marketings totaled 1.9 million, 10% higher than year ago. March placements totaled the largest since the USDA data series began in 1996.

To some, the Cattle on Feed numbers indicate a “wall” of cattle looming in the months ahead. If those bulging numbers materialize, prices will take a beating. The contrarian view suggests that forecast walls of cattle often take care of themselves, and aggressive marketings by feedyards this spring indicates that could happen again.

Feeder steers and heifers sold $2 to $6 per cwt. higher at auction, according to AMS reporters. Steer and heifer calves sold mostly $3 to $8 higher, with instances of $10 to $12 higher.

“Two weeks ago when there was a lull in the market, and order buyers were bargain hunting as feedyards weren’t too interested in placements at that time,” AMS said. “However, this week most feedyards upped their bids and those same order buyers can’t purchase them fast enough to satisfy their customers. Feeder numbers in the Northern Plains are tightening up very quickly so anyone that wanted to purchase had to pounce quickly on the cattle offered for sale.”


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