Cattle markets struggled again this week and CattleFax analysts suggested we could move down from this point into a seasonal fall low.
CattleFax analyst Mike Murphy noted it's likely the cattle markets will break down going forward because this is been a long, strong move up over six months, and because several other factors suggest it. This was in a webinar at midweek.
Murphy also said we need to realize with the coming increases in beef tonnage over the next few years we'll face cyclical down price pressure.
CattleFax is predicting we will see an additional 700,000 to 800,000 cows appear on the Jan. 1, 2018 inventory report.
Murphy also noted there is good forage across all of the US except the far Southeast, and if that remains so then the expansion should continue through this year.
The Fed Cattle Exchange Thursday reported several cash sales from $131-132.75. The Chicago Mercantile Exchange (CME) live cattle price has varied from just over $122 to just under $124.
The CME feeder cattle price has varied from below $149 to just under $153. Oklahoma National Stockyards in Oklahoma City this week reported prices on 700-750-pound cattle at $147-156.
On Friday morning, USDA reported cattle and calves on feed for the slaughter market in feedlots with capacity of 1,000 or more head totaled 11.0 million head on May 1, 2017, which was 2% above May 1, 2016. This matched industry expectations
The currency of the live cattle market has been exhibited in carcass weights. Cassie Fish, who blogs a daily column called The Beef, said on Thursday that steer carcass weights for the week ending May 12 were 836 pounds, up from the previous week's weight of 832, which could be the seasonal low. Regardless of whether it is or isn't, this is a tremendous drop from 918 pounds in the fourth quarter of 2016.
This has likely helped the beef markets in their run up.
Murphy said several factors point to a market turn sometime between September and November. He added that if growing conditions remain favorable and corn stocks-to-use ratios remain similar to expectations, there should be no corn-driven price pressure on feeder cattle this fall.
In the CattleFax webinar analyst Ethan Oberst noted an in-house survey showed cow-calf producers were able to lower cow cost per head from $605 in 2015 to $588 in 2016. Calf revenue per head was $822.96 in 2016, down from $1,281 in 2015.