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Are the good times over?
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<blockquote data-quote="Frankie" data-source="post: 208059" data-attributes="member: 13"><p>"Cattle Markets Still Freefalling: Is There An End in Sight?</p><p></p><p>Fed cattle and heavy feeder cattle markets have dropped sharply in recent weeks under the weight a host of supply and demand factors and bearish market psychology. Futures markets in particular, have probably turned from being too high during much of the recent past to likely being oversold now with respect to summer market expectations. Although it is too early to predict with much confidence, there are some indications that markets are beginning to stabilize and at least establish some footing. </p><p></p><p>Through much of February and March, poor packer and feedlot margins resulted in a weekly tug of war that generated much volatility from week to week without any clear victor. However, since the March Cattle on Feed report confirmed the large feedlot inventories looming in coming months, the feedlots have clearly come out the losers with fed cattle prices dropping enough to improve packer margins while feedlot losses are very severe. The problems come from both supply and demand.</p><p></p><p>On the supply side, increased feedlot inventories, combined with huge carcass weights have resulted in higher beef production. For the year to date, beef production is up 5.6 percent. Slaughter has increased by 2.2 percent while the balance of increased meat production is due to heavy carcass weights which have added the equivalent of 15,000 to 20,000 head per week to slaughter totals. There are several factors that may indicate improving market conditions over the coming weeks. Fed cattle prices have dropped enough that marketings are picking up. This last week, cattle slaughter was up 3.8 percent compared to one year ago. Also this last week carcass weights decreased perhaps indicating that weights have peaked and will begin declining seasonally. Finally, April and May feedlot placements are likely to be relatively low after several months of strong placements. It is possible, that the feedlot situation by June 1 could look significantly improved compared to current conditions. </p><p></p><p>The key to the above paragraph will be on the demand side. A more aggressive feedlot marketing rate will mean that beef production will continue high in a meat market loaded with beef, pork and poultry. So far this year, the boxed beef market has been very sensitive to additional beef supplies and the additional beef sales needed in the next few weeks may put additional pressure on boxed beef prices. If packer margins erode severely again, slaughter rates would likely decrease and contribute to delays in improving feedlot supply fundamentals. The poultry industry will likely curb production plans somewhat based on poultry market weakness but further weakness could develop if Asian flu continues to decrease poultry consumption around the world. </p><p></p><p> </p><p>Source: Derrell S. Peel, OSU Extension Livestock Marketing Specialist</p><p></p><p>Link: <a href="http://cattlenetwork.com/content.asp?contentid=28544" target="_blank">http://cattlenetwork.com/content.asp?contentid=28544</a></p></blockquote><p></p>
[QUOTE="Frankie, post: 208059, member: 13"] "Cattle Markets Still Freefalling: Is There An End in Sight? Fed cattle and heavy feeder cattle markets have dropped sharply in recent weeks under the weight a host of supply and demand factors and bearish market psychology. Futures markets in particular, have probably turned from being too high during much of the recent past to likely being oversold now with respect to summer market expectations. Although it is too early to predict with much confidence, there are some indications that markets are beginning to stabilize and at least establish some footing. Through much of February and March, poor packer and feedlot margins resulted in a weekly tug of war that generated much volatility from week to week without any clear victor. However, since the March Cattle on Feed report confirmed the large feedlot inventories looming in coming months, the feedlots have clearly come out the losers with fed cattle prices dropping enough to improve packer margins while feedlot losses are very severe. The problems come from both supply and demand. On the supply side, increased feedlot inventories, combined with huge carcass weights have resulted in higher beef production. For the year to date, beef production is up 5.6 percent. Slaughter has increased by 2.2 percent while the balance of increased meat production is due to heavy carcass weights which have added the equivalent of 15,000 to 20,000 head per week to slaughter totals. There are several factors that may indicate improving market conditions over the coming weeks. Fed cattle prices have dropped enough that marketings are picking up. This last week, cattle slaughter was up 3.8 percent compared to one year ago. Also this last week carcass weights decreased perhaps indicating that weights have peaked and will begin declining seasonally. Finally, April and May feedlot placements are likely to be relatively low after several months of strong placements. It is possible, that the feedlot situation by June 1 could look significantly improved compared to current conditions. The key to the above paragraph will be on the demand side. A more aggressive feedlot marketing rate will mean that beef production will continue high in a meat market loaded with beef, pork and poultry. So far this year, the boxed beef market has been very sensitive to additional beef supplies and the additional beef sales needed in the next few weeks may put additional pressure on boxed beef prices. If packer margins erode severely again, slaughter rates would likely decrease and contribute to delays in improving feedlot supply fundamentals. The poultry industry will likely curb production plans somewhat based on poultry market weakness but further weakness could develop if Asian flu continues to decrease poultry consumption around the world. Source: Derrell S. Peel, OSU Extension Livestock Marketing Specialist Link: [url=http://cattlenetwork.com/content.asp?contentid=28544]http://cattlenetwork.com/content.asp?contentid=28544[/url] [/QUOTE]
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