Cattle futures rallied after potentially finding the lows on Monday, but cash calf and feeder cattle prices continued under pressure most of the week.
Steers and heifers sold mostly $2-$6/cwt. lower, with calves as much as $10 lower, according to the Agricultural Marketing Service (AMS).
Week to week on Friday, Feeder Cattle futures closed an average of $3.29 higher ($2.55 to $3.77 higher).
“The most pressing issue from a marketing standpoint comes from the expectation that calf prices will continue to soften from now through November,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Producers are already taking a hit on the chin with relatively low calf prices…the market is poor and there is no near term improvement in sight with the fall marketing rush around the corner.”
In his neck of the woods, where dryness is spreading, Griffith noted some producers are compounding the situation by using available forage to hold calves longer in hopes of market improvement.
“The available marketing alternatives become fewer the longer a person waits to make a decision,” Griffith says. “Not only do alternatives become fewer, but the check often gets smaller.”
Fed Cattle Prices Sag
Fed cattle prices continued to grind lower on lighter week-to-week trade through late Friday afternoon.
Week to week through Thursday afternoon, on lighter trade, the Five Area direct average steer price was $2.82 lower at $99.49/cwt. on a live basis. The average dressed steer price was $6.69 lower at $159.50.
Through Friday afternoon, USDA reported negotiated prices in the Texas Panhandle $1 lower at $99.
Live Cattle futures rallied, though, helped along by surging Lean Hog futures. Week to week on Friday, they were an average of $3.91 higher ($3.45 to $4.70 higher).
Plentiful supplies and the continued bottleneck resulting from less harvest capacity, resulting from the Tyson plant fire, continue to cap fed cattle price potential.
So far, it appears that positive fed cattle basis continues to encourage timely fed cattle marketing, maintaining currentness. However, Griffith explains that could change, given the incentive of further-out futures premiums.
“Cattle feeders have been willing sellers of fat cattle most of the year, but the market is beginning to send signals that may derail the marketing schedule and result in heavier cattle being marketed,” Griffith says. “The deferred contract months are trading at a premium compared to the October contract, which provides cattle feeders an incentive to feed cattle longer. The December Live Cattle contract has a $6/cwt. premium priced in compared to October while the February contract has more than a $12 premium. These types of premiums may result in feedlot managers deciding to keep cattle on feed two to three weeks longer in hopes of capturing higher prices. This decision will also result in more beef hitting the market.”
At the same time, besides seasonal pressure, wholesale beef prices continue downward, adjusting to fundamental price levels before the Tyson fire.
Choice boxed beef cutout value was $6.43 lower week to week on Friday at $220.88/cwt. Select was $3.34 lower at $198.60.
“Prices are closing in on $20 lower than their weekly peak but remain $5 higher than where they were prior to the fire,” Griffith explains. “It is likely boxed beef prices will continue to moderate as fall approaches since the market is typically soft compared to the summer. The next round of support for beef prices will be the holiday season, but holiday price support is a few months down the road.”
Chinese purchases of U.S. pork last week, if continued, could provide some support.
Friday to Friday Change*
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||Sept. 12||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$147.21||– $8.08|
|700-800 lbs.||$143.06||– $4.09|
|800-900 lbs.||$135.35||– $5.10|
|500-600 lbs.||$142.74||– $5.35|
|600-700 lbs.||$141.30||– $3.48|
|700-800 lbs.||$137.73||– $2.01|
|400-500 lbs.||$139.62||– $5.15|
|500-600 lbs.||$132.09||– $5.47|
|600-700 lbs.||$126.86||– $5.12|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Sept. 13 ($/cwt)||Change|
|Ch-Se Spread||$22.28||– $3.09|
|Feeder Cattle||Sept. 13||Change|
|Jan ’20||$131.975||+ $3.500|
|Live Cattle||Sept. 13||Change|
|Corn futures||Sept. 13||Change|
|Oil CME-WTI||Sept. 13||Change|
|Jan ’20||$54.27||– $1.55|
|Equity Indexes||Sept. 13||Change|
|Dow Industrial Average||27219.52||+ 422.06|
|S&P 500||3007.39||+ 28.68|
|Dollar (DXY)||97.86||– 0.53|