As a snowstorm bears down on the prairies just in time for spring calving, the cattle markets continue their slide downwards, and futures markets try to figure out how low they have to go to clear additional product in the value chain.
That’s where we start this week’s discussion from Beef Market Update analyst Anne Wasko, where she says June live cattle prices are down 7% in the last 30 days alone.
“Feedlots are stuffed,” she says, in the commentary below. “The futures market is trying to figure out how low they have to go to clear this additional product.”
The March 23 U.S. cattle on feed report saw final numbers at the high end of market expectations: March 1 On feed was at +9% (vs +8%); February placements were +7% (vs +4.5%); and, February marketings were at +2% (vs +1%). Expectations are for smaller placements for the next several months, simply because the cattle have already been placed and now good moisture in those parts could help with turnout this spring, says Wasko.
Outside news regarding potential trade wars with China and never-ending renegotiations of NAFTA has the market feeling some jitters, too. And we have to keep in mind that we’re functioning with lower packer capacity than even five and 10 years ago.
It’s not all bad news, though. We’re headed in to spring, where strong demand traditionally lies ahead, we’ve still got strong export demand, packer margins have been positive, and feedlots are current, she says.