Calf prices continued to decrease last week.
Andrew Griffith, Extension ag economist with the University of Tennessee, says it has been a rough start to the summer for the feeder cattle market.
“This week’s 500- to 600-pound Tennessee steer price is at its lowest level since February 2017,” he says in his weekly market outlook.
“Similarly, the feeder cattle index is at its lowest price level since March 2017, and there does not appear to be any relief in sight as the fundamental supply and demand factors appear as if they will continue to pressure prices.
“The questions producers have to ask is if they can be profitable with steer calves valued between $700 and $750 per head and heifer calves valued closer to $600 to $650 per head at weaning.”
Increasing corn prices have applied much of the pressure on the market.
“Higher corn prices provide more incentive to put more weight on cattle outside the feedlot, and this will likely remain true heading into the fall marketing time period,” Griffith says. “This brings forth a management decision that producers should already be considering in the form of backgrounding calves instead of selling off the cow.”
The increase in feed costs could cut into creep feeding strategies this summer.
“Higher feed prices may make this a more difficult decision, but this will also be influenced by grass availability the next several months,” Griffith says.
“This means there are a few opportunities in the market right now, and the opportunities may get better heading into the fall marketing time period if prices continue to decline.”
Last week’s USDA Cattle on Feed report showed a 1.6% increase in inventory from a year ago for feedlots with a capacity of 1,000 head or more. Griffith says this is slightly higher than pre-report estimates.
May placements were down 2.8% from a year ago, much lower than the anticipated 4.1% decline. May marketings were up 0.7%, nearly the same as pre-report estimates.
Placements of cattle under 700 pounds were down 14%, with placements of cattle weighing 700 to 899 pounds up 3.5%.
Heavyweight calf placements were up more than 4.5%.