Late-month rally slows stocker-feeder price slide
Stocker and feeder prices declined $8 to $10 per hundredweight during June, according to Drovers/CattleNetwork’s 50-market auction summary. But a late-month rally stopped the slide and put cattle buyers back in the seats at local auction markets.
Steer calves weighing 400 to 500 pounds sold for an average of $139.41 per hundredweight during June, while yearling steers weighing 600 to 700 pounds fetched an average of $124.87.
The cattle markets displayed a typical seasonal trend with a decline from the spring high prices. Yearling feeder cattle declined 13 to 15 percent by mid-June from April’s average of 137.66, but the late-June rally pulled the average monthly price to $124.87. That’s a retreat of 10 percent from April.
A similar scenario developed in the fed cattle market, with a late-June rally adding $4 to $8 per hundredweight to prices. Last week fed cattle traded at $112 per hundredweight.
The trend in recent weeks has analysts suggesting that the summer lows are already in place for 2011. That would be welcome news, but several factors are in line to create potential volatility as summer heats up. Demand for beef, especially in the form of exports, continues to support cattle prices. Should that demand weaken cattle prices will tumble.
More likely to create volatility for cattle prices are the corn and oil markets. Both have been under pressure recently, and it’s no coincidence that cattle prices moved higher during that time frame.
It’s difficult to imagine corn’s long-term outlook as anything other than higher, but traders will have a better feel for the market after USDA’s June 30 acreage report.
The oil market, however, has moved lower in recent weeks and traders aren’t finding many clues that could drive prices up in the near term. Last week President Obama announced intentions to release 60 million barrels of crude from the Strategic Oil Reserve and that sent markets lower.
The release of oil from the Strategic Reserve brought both praise and criticism, as most presidential actions do, but oil and gasoline prices had already begun to retreat and the additional supply helped push the markets even lower.
Crude oil traded yesterday at about $90 per barrel more than 10 percent below this spring’s peak. The national average price for gasoline this week is $3.65, six cents lower than the previous week, and about 90 cent higher than the same week last year.