Analysts have been watching trends in a variety of numbers, including slaughter volume and cattle on feed statistics from the Jan. 24 report.
“A highlight from last week was the volume of slaughter cows hitting a five-year high,” Len Steiner and associates said in their Daily Livestock Report. “Total cow slaughter was 138,600 head, the highest weekly number since January 2013.”
The recent high beef production was impacting markets last week.
“Wednesday’s and especially Thursday’s markets fell in light of very high beef production in December (up 7% year-over-year), uncertainty regarding world markets and pre-report estimates showing larger placements than many market participants expected,” Steiner said.
On the hog side, the coronavirus and its impacts were hurting lean hog markets.
“Coronavirus is spreading through Asia, closing public spaces during the Chinese new year celebrations in an attempt to slow the spread of this epidemic,” Steiner and associates said. “Lean hog contracts are bearing the brunt of that disease concern. Friday’s lean hog futures in the first three contracts of 2020 were down.”
Steiner and associates said the Jan. 24 Cattle on Feed report was largely as expected.
“The report was in line with pre-report estimates, for the most part,” Steiner said. “Placements were a touch higher, while marketings were a touch lower. Cattle feeders continued to search the country high and low to find 1,000-pound-plus animals to put on feed. Those animals will mostly be fed against a lofty April live cattle contract that was $124.30 at Friday’s close.”
Feedlots had been continuing to respond to the situation after the Tyson packing plant fire.
“Feedlots have been placing a larger number of cattle that weigh over 700 pounds since September,” Steiner said. “Much of that is driven by profitable feeding opportunities that emerged post-Tyson beef packing plant fire. Live cattle futures enabled those cattle to be hedged above break-even levels.”
The number of heifers on feed continued to climb, although the ratio compared to steers did dip.
“The number of heifers on feed climbed above a year ago for the 16th straight quarter,” Steiner said. “The ratio of steers to heifers did dip below the previous quarter to 38%, in part because steers on feed reached above a year ago for the first time in five quarters.”