Cattle futures meandered to a lower close in mostly sideways trade on Monday with traders apparently awaiting further direction from the cash market.
After $1.10 lower in spot Oct., Live Cattle futures closed 15¢ to 47¢ lower, except for 10¢ and 27¢ higher at the back.
Other than 5¢ lower in spot Oct., Feeder Cattle futures closed an average of 50¢ lower.
Choice boxed beef cutout value was 59¢ higher Monday afternoon at $198.81/cwt. Select was 52¢ higher at $190.57.
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Major U.S. financial indices closed at record highs on Monday, buoyed by strong quarterly earnings reports and gains in crude oil.
The Dow Jones Industrial Average closed 85 points higher. The S&P 500 closed 4 points higher. The NASDAQ closed 18 points higher.
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Increasing cattle number are boosting opportunities for stocker operators, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.
“Feedlot preferences to buy pounds in the form of heavy feeders rather than placing lighter feeders and adding more weight per animal in the feedlot necessarily translates into a signal for stocker producers to provide that additional weight gain on feeder cattle,” Peel explains. “As stocker producers respond to these signals, they are not only adding weight to feeder cattle but are spreading out feeder supplies over time. Larger cattle supplies allows feedlots for focus more on feeding yearlings, and that in turn, provides more opportunities for stocker producers to profitably add weight to calves to meet that feedlot demand.”
Along the way, Peel says stocker demand is lifting the price of heavy feeders and reducing the seasonal price decline of lighter calves.
“Big feeder cattle (over 700 lbs.) have not only failed to decline seasonally but have increased so far this fall,” Peel says. “Current prices for heavy feeders are about 8% above August levels. Strong feedlot demand for bigger yearlings is more than offsetting increased feeder cattle supplies this fall. Feedlots continue to have an incentive to place and feed cattle and, with bigger feeder supplies, to focus more on yearlings rather than calves at this time of the year. Feedlots have the ability to be more choosy about the kind of cattle they want to feed and the resulting demand for yearlings relative to middleweight feeders produces a more pronounced stocker signal in the form of a higher value of gain. It’s typical this time of year to see middleweight feeder price weaken relative to heavy feeders but the tendency is even more evident with larger feeder cattle supplies.”
In Oklahoma, where stocker and feeder prices typically decline 4% between August and October; this year, prices are about 2% less. At the same time Peel notes auction volume in the state for the past six weeks was 11% more year over year.
“It appears that abundant supplies of other forages have permitted stocker purchases despite delays in wheat pasture this fall,” Peel says. “Fall armyworms have either damaged early-planted wheat or have prompted delays in wheat planting to reduce the risk of damage. Nevertheless, it seems that significant numbers of stockers are waiting in the wings on other forages until wheat pasture is ready.”