The Class III futures market took an unchanged spot session as decidedly bearish yesterday and retraced a large chunk of Friday’s gains, largely keeping the trading range of the past month intact with a “wax on-wax off” temperament and again raising the question of whether or not the trade is just coiling in consolidation mode, or if bearish headwinds will begin to work prices lower?
Class III futures finished February on a bullish note, with the March-December contracts surging between 9¢-38¢ higher. The 2Q 2015 futures pack average gained 33¢ Friday to close out the month at $16.31/cwt., posting a week-over-week gain of 56¢ and increasing 63¢ from the end of January.
Estimated U.S. January 2015 cull cow prices (beef and dairy combined) averaged $112.00/cwt., according to the USDA/NASS Ag Prices report. The average is down $3.00/cwt. from December’s revised estimate, but $23.70/cwt. more than January 2014. It is the lowest monthly average since June 2014.
Prices across most U.S. regions increased week-over-week.The largest increase in prices occurred in the Northeast, as continued cold temperatures and snow accumulation were setting records, particularly in the New England states. Prices were elevated at most trading hubs with the exception of the Midwest, where prices originally spiked on Wednesday last week and then moderated by the end of the report week.
Weekly dairy cull cow slaughter continues to outpace year-ago levels and, while it’s still early in the year, is now ahead of year-to-date totals for 2012, when more than 3 million dairy cull cows were sold for beef. Texas, Kentucky and Pennsylvania dairy replacement auctions are summarized.
Follow-through buying started Wednesday in both Class III and Cheese futures markets, but that dynamic seems to be running out of steam, as early gains yesterday could not keep pace and the market settled back down to finish mixed.