Weekly Market Highlights

Cattle futures bounced back last week, gaining back more than was lost the previous week, helped along by higher outside markets.

That started to show up in cash prices paid at late-week sales, keeping in mind receipts were significantly lower due to the holiday.

Feeder Cattle futures closed an average of $3.80 higher week to week on Friday, from $2.77 higher to $5.22 higher in spot Jan.

“Feeder markets are reflecting a mix of influences including seasonal supplies of calves, wheat pasture forage conditions, higher corn prices and volatility in futures markets,” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Feeder markets have been very dynamic and it means that both cow-calf and stocker producers must constantly evaluate changing market conditions.”

For instance, Peel pointed to the currently steeper price rollback on calves lighter than 600 lbs. and the impact on value of gain. He gave the example of cow-calf producers selling calves at weaning, explaining recent prices mean the value of adding 50 lbs. to a 500-lb. steer is about 50¢/lb.

“For producers holding calves after weaning, the low value of gain must be balanced against the value of preconditioning programs and extra weaning time before sale,” Peel said. “The implications of current market conditions depend on the current weight of animals and the amount of additional weight added to animals prior to sale.”

Fed Cattle Prices Gain

Seasonal strength in wholesale beef values helped lift fed cattle prices last week.

Choice boxed beef cutout value was $4.50 higher week to week on Friday at $242.85/cwt. Select was $5.70 higher at $220.68.

The average dressed steer weight for the week ending Nov. 14 was 930 lbs., which was 6 lbs. heavier than the previous week and 18 lbs. heavier than the prior year. That’s according to the most recent Actual Slaughter Under Federal Inspection report from USDA. The average dressed heifer weight of 846 lbs. was the same as a week earlier but 5 lbs. heavier than the same week last year.

Negotiated cash fed cattle prices ended the week generally steady to $1 higher on a live basis and $2 higher in the beef, according to the Agricultural Marketing Service.

Live prices were at $111/cwt. in the Southern Plains, $110-$111 in Nebraska and $109-$110 in the western Corn Belt. Dressed trade was at $174.

Live Cattle futures closed an average of $2.17 higher week to week on Friday, from $1.32 higher toward the back to $2.70 higher.

“This year’s December Live Cattle contract closed at $111.25 on Friday, which was $9.05 lower than last year, while the February contract is $11.37 lower than last year,” explain AMS analysts.

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

*Wednesday-to Wednesday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Doggedly higher grain prices, languishing cash fed cattle prices and increasing demand uncertainty added bearishness to cattle markets as last week progressed.

Calves and yearlings sold steady to $3/cwt. higher early in the week and steady to $4 lower later on, according to the Agricultural Marketing Service.

“With the higher grain prices and forage prices, we will see persistent pressure on feeder cattle and calf prices into 2021,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “One dollar higher corn costs translate into about $6-$7/cwt. lower feeder cattle prices. This cattle price impact is being exacerbated by dry conditions in the western U.S. and hay prices that are creeping higher. The impact on calf prices will be greater.”

Koontz points out Corn futures (2020-21 crop) are about $1 higher than in August and Soybean futures are about $2 higher, including deferred contracts. He adds that prices for both appear to be at a premium to what underlying fundamentals suggest.

Feeder Cattle futures closed an average of $2.21 lower week to week on Friday, from $1.67 lower at the back to $3.27 lower in spot Jan.

USDA’s Economic Research Service (ERS) lowered the expected fourth-quarter feeder steer price by $6 from the previous month to $137/cwt., in the latest Livestock, Dairy and Poultry Outlook (LDPO). That’s basis Oklahoma City for Medium #1. The lower revision is based on seasonal price weakness and cash prices in October down more than $9 year over year at $137.55. ERS reduced expected feeder steer prices for next year by $1, based on higher projected feed prices.

Specifically, ERS forecasts feeder steer prices next year at $133 in the first quarter, $136 in the second, $141 in the third; annual average price of $138.

Feedlot Placements Down 11%

Heading into the new week, markets will likely view Friday’s monthly Cattle on Feed report as neutral, if not a touch friendly.

October placements of 2.19 million head in feedlots with 1,000 head or more capacity were 10.97% less than a year earlier. Estimates ahead of the report suggested placements to be about 1.5% more.

Marketings of 1.87 million head in October were just 2,000 fewer than a year earlier, about in line with pre-report estimates.

Cattle on feed Nov. 1 numbered 11.97 million head, which was 1.33% more than a year earlier. That was slightly less than expectations, but the most for the month since the data series began in 1996.

Fed Cattle Prices Steady

Negotiated cash fed cattle prices ended last week steady, according to data from the Agricultural Marketing Service (AMS). Live prices were at $110/cwt. in the Southern Plains and Nebraska and at $109-$110 in the western Corn Belt. Dressed prices are steady at $172.

Live Cattle futures closed an average of $1.50 lower week to week on Friday, from 95¢ to $2.00 lower.

“Heavy cattle continue to put pressure on some regional markets, but it is becoming less and less of a concern with each passing week. Prices may be a little softer next week with the shortened kill week,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

“Despite the rising number of cattle on feed, front-end supplies—the number of cattle on feed over 150 days—decreased for the third consecutive month as a percentage and in volume,” say ERS analysts, in the LDPO. “This is the result of an improving pace of fed cattle slaughter, which was faster than a year ago for the last three months and above the five-year average. The quickening slaughter pace, combined with an ample supply of fed cattle at heavier weights, led to higher expected beef production in fourth-quarter 2020 relative to 2019. Nevertheless, tighter front-end supplies will likely support continued seasonal movement in fed steer prices.”

ERS left the expected five-area direct fed steer price unchanged for the fourth quarter ($109) and for next year: $113 in the first quarter, $110 in the second quarter, $114 in the third quarter; annual average price of $114.

Boxed Beef Prices Continue Higher

Choice boxed beef cutout value was $12.37 higher week to week on Friday at $238.35/cwt. Select was $5.52 higher at $214.98. That’s $24.03 higher for Choice over the past two weeks and $16.49 higher for Select.

“Sharp upticks in Daily Boxed Beef prices this week caught many observers off-guard with Rib meats leading the charge,” say AMS analysts. “Wholesalers and retailers continued to buy beef out front to cover their customers’ needs moving towards the Christmas holiday season.”

By most measures, domestic consumer beef demand remains resilient in the face of multifold pandemic challenges, but those challenges will likely increase heading into winter.

“Loss of outdoor dining in cold weather will further aggravate restaurant challenges.  Food service demand is likely to be additionally affected with worsening public health challenges. Macroeconomic concerns will grow as consumers go forward with less unemployment support,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Ample supplies of beef, pork and poultry increase market price pressure, though disruptions in supply are a threat as well.”  

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

*Thursday-to Thursday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Recent futures market strength, stronger wholesale beef values and higher negotiated cash fed cattle prices added support to calves and feeder cattle last week.

Steers and heifers sold $2-$5/cwt. higher, with instances of $7-$10 higher at some auctions, according to the Agricultural Marketing Service (AMS).

“Calf movement in the Northern Plains is in full swing as drought conditions bring cattle to town earlier than normal,” say AMS analysts. “With the earlier time period of marketing their calves, drought-stricken ranchers are selling less pounds which will lead to less dollars in the bank account.”

With that said, year-to-date auction receipts through last week were 487,000 head fewer than the same period last year, according to AMS; 520,000 head fewer than the five-year average. Direct receipts for the last five weeks are more than 70,000 head behind last year’s pace.

Feeder Cattle futures closed an average of $1.65 higher week to week on Friday (65¢ to $2.20 higher) except for 22¢ lower in spot Nov. That was in the face of stronger grain prices fueled by the crop friendly World Agricultural Supply and Demand Estimates (WASDE)

USDA increased the projected season-average corn price by 40¢ to $4.00/bu., on reduced expected corn yield, production and ending stocks. The same drivers were behind the 60¢ increase in the projected season-average soybean price to $10.40/bu.

Week to week on Friday, Corn futures closed an average of 7¢ higher through the front six contracts. Soybean futures closed an average of 46¢ higher through the front six contracts.

Cattle futures also gained week to week despite a sharp drop Friday, tied to apparent concerns that escalating COVID-19 cases could once again disrupt packing production.

“October was a tough month for calf prices, but if the first two weeks of November is any indication of what is to come, then cattle producers should be seeing the light at the end of the tunnel,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Steer and heifer calf prices surged the past two weeks, based on Tennessee weekly auction market average prices. It is clear that stocker and backgrounding operations still have a strong demand for weaned and preconditioned cattle, but calves being weaned on the truck have also seen a price boost…There is a good chance that freshly weaned calf values increase $20 to $30 per head before the end of the year if there is any bounce in the market at all heading into December.”

Prices in the Southern Plains were also boosted by recent moisture and elevated wheat pasture prospects.

For instance, in Oklahoma, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says prices the previous week for steers weighing 450-600 lbs. were the highest since late August and early September. He notes the combined state auction price for Medium and Large #1 steers at 450-500 lbs. the previous week was $166.89/cwt. compared to $147.34 a week earlier, when storm severity helped damper markets.

Noting currently higher value of gain for cattle heavier than 600 lbs., as well as a possibly shorter winter grazing season, Peel says, heavier starting weights might make sense for stocker producers to consider.

“The next few weeks may result in additional demand for stockers but will likely also see larger supplies of feeder cattle in Oklahoma auctions. Combined Oklahoma auction volume the past six weeks was down nearly 33%, in part due to the impacts of the winter storm,” Peel explained in his weekly market comments. “It appears there are significant numbers of calves and feeders yet to be marketed this fall. Stocker and feeder prices could move either higher or lower in the next month depending on the balance of increased demand and increased supply in auctions.”

Fed Cattle Prices Increase

Negotiated cash fed cattle tradeended the week with live prices $3 higher at $110/cwt. in Nebraska and the Southern Plains; $3-$4  higher in the western Corn Belt at $108-$110. Dressed prices were at $172, which was $4 higher in Nebraska and $5-$8 higher in the western Corn Belt. Although prices were higher, some thought the market was poised to reap steeper gains.

Through Thursday, the five-area direct weighted negotiated fed steer price was $109.46/cwt. on a live basis, which was $3.11 more than the previous week but $5.69 less than the same week in 2019. The average steer price in the beef was $171.88, which was $6.58 more week to week but $10.07 less year over year.

Live Cattle futures closed an average of 92¢ higher week to week on Friday, from 7¢ higher in near Feb to $1.65 higher.

“The value of cattle this week compared to last week represents an increase of $35 to $40 per head, which makes hitting the $115/cwt. price that much more achievable before the end of the year,” Griffith says. “The strong margins at the packer level and good beef demand have packers salivating for cattle. Some of the strong margins upstream have been passed down to cattle feeders, and cattle feeders are doing the same when purchasing feeder cattle. Optimism in the market is strong heading toward December.”

Estimated total cattle slaughter for the week ending Nov. 14 was 653,000 head, which was 6,000 head more than the previous week but 16,000 head fewer than the same week last year. Estimated year-to-date total cattle slaughter of 28.06 million head would be 1.07 million fewer (-3.67%) than the previous year. Estimated total year-to-date beef production was 23.31 billion lbs., which would be 253.3 million lbs. less (-0.01%) than the previous year.

Choice boxed beef cutout value was $11.66 higher week to week on Friday at $225.98/cwt. Select was $10.97 higher at $209.46. That’s $17.88 higher for Choice over the past two weeks; $18.22 higher for Select.

Carcass weights show signs of peaking following the prolonged period of fed cattle supplies backlogged by the pandemic. The average dressed steer weight of 926 lbs. the week ending Oct. 31 was 5 lbs. lighter than the previous week, though still 23 lbs. heavier than the same week last year. The average dressed heifer weight of 848 lbs. was 1 lb. heavier than the prior week and 13 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report.

“Select grade beef continues to see fairly decent demand during a time when Choice grade prime rib and other holiday cuts take center stage. There is no doubt some holiday purchasing is taking place, but the strong prices for boxed beef could just be simply demonstrating that beef prices are being supported by good demand at the consumer level,” Griffith says. “There always seems to be concern that consumer discretionary spending may move away from beef when things get tight. However, due to the pandemic, many consumers have more than ample discretionary dollars because they are not able to participate in many of their extracurricular activities. Thus, lower incomes may be evident in many households, but leisure expenditures have also been reduced. It will be interesting to see if consumer expenditures revert back to pre-pandemic tendencies moving forward.”

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

*Thursday-to Thursday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Higher Cattle futures and thoughts that low prices may be in the books helped cash calf and feeder cattle prices build on the previous week’s gains.

Steer and heifer calves sold $3-$7/cwt. higher last week, with the most advance at lighter weights, according to the Agricultural Marketing Service (AMS). Yearling steers and heifers sold $2-$5 higher.

“Many Northern Plains farmer-feeders have been fortunate enough to complete their corn harvest and are now taking the time to procure calves for winter feeding,” AMS analysts explain. “Heavily hit drought areas in Nebraska and the Dakotas will no doubt show a lighter-weight bawling calf coming off the cow, but those reputable calves will have some compensatory gain for the new owner, provided that the health program is in order.

Feeder Cattle futures closed an average of $1.32 higher week to week on Friday, from 30¢ higher in spot Nov to $1.80 higher. That makes for an average of $8.23 higher over the last two weeks.

Stronger Cattle futures come in the face of the rally in grain prices, fueled by everything from poor growing conditions in South America to strong exports and the lower U.S. Dollar.

Week to week on Friday, Corn futures closed an average of 10¢ higher through the front six contracts.

In the meantime, recent moisture across the Southern Plains lifted hopes for wheat pasture. Until then, hopes for grazing wheat dwindled amid expanding drought conditions.

“The wheat crop is generally poised to respond quickly to the timely precipitation. Stocker demand may pick back up somewhat in the coming weeks with improvement in the wheat crop,” said Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “…Improved stocker prospects, combined with a sharp recovery in the Feeder Cattle futures markets the previous week, may mean that the seasonal low in calf and stocker prices is past.”

Fed Cattle Prices Gain

Seasonally snugger fed cattle supplies, especially in the Southern Plains, supported fed cattle prices last week.

Negotiated cash fed cattle prices were $1 higher than the previous week in the Southern Plains at $107/cwt. on a live basis, $4-$6 higher in Nebraska at $107/cwt., and $3-$4 higher in the western Corn Belt at $105-$106. Dressed trade was $2-$9 higher at $167, according to the Agricultural Marketing Service.

Live Cattle futures closed an average of $1.71 higher week to week on Friday, from 35¢ higher in spot Dec to $2.40 higher. That’s an average of $5.57 higher over the last two weeks.

“The gains (cash fed cattle prices) should be the start of a slow and steady climb moving into the holiday season,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “As has been mentioned previously, there remains uncertainty as it relates to beef movement for the end of the year holidays. However, seasonal beef demand will spur some type of price run that will benefit cattle feeders. The real question is how much of a benefit will it be to cattle feeders. December futures still have Live Cattle trading below $109, but optimism says there is potential to push the Live Cattle market as high as $115 before the end of the year.”

The monthly accumulated five-area direct fed steer price was $106.65/cwt. in October, which was $2.59 more than the previous month, but $2.64 less than the same period last year. The accumulated steer price in the beef was $167.47, which was $4.24 more than the prior month, but $5.15 less than the same time last year.

Wholesale Values Budge Seasonally Higher

“Beef demand in the fourth quarter in recent years has been supportive for cattle prices,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “This number is one we will have to continue to watch this year for signs the U.S. economy is recovering, though all primals are not considered equal in this timeframe. Rib primal values have been the primary benefactor of increased consumer demand in other years while chuck and rounds, seem to have more staying power through the first quarter.”

Choice boxed beef cutout value was $6.22 higher week to week on Friday at $214.32/cwt. Select was $7.25 higher at $198.49.

Hopefully U.S. beef exports will provide more support than recent months, which were challenged by pandemic supply and demand disruptions.

U.S. Beef exports to major Asian markets were about steady with the prior year in September but trended lower overall, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

September beef exports were down 6% from a year ago to 103,277 metric tons (mt), valued at $600.9 million (down 9%). Coming off record performances in August, exports to South Korea and Taiwan remained strong, while setting another new record in China. However, COVID-19 related obstacles continued to negatively impact demand for U.S. beef in several key markets, especially Mexico, Central America and the Caribbean.

“Although restaurant traffic and foodservice activity are not back to normal in most Asian markets, USMEF is very encouraged by the recovery in Asia and this was especially evident in the strong August and September exports of U.S. beef to Korea, Taiwan and China,” according to Dan Halstrom, USMEF president and CEO. “As we close out the year, U.S. beef has a great opportunity to capture greater market share in Asia due to tightening supplies from Australia. While it will require more time, we also expect U.S. beef to regain momentum in regions where beef demand depends more heavily on travel and tourism, and where e-commerce channels are not as well-developed.”

For January through September, beef exports trailed last year’s pace by 8% in volume (911,936 mt) and 9% in value ($5.55 billion).

You can find a detailed summary of U.S. beef and pork exports at the USMEF website.

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

*Thursday-to Thursday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Calf prices finally began finding some traction later last week with resurgent futures prices and despite sharply lower outside markets.

“The market was active as buyers were feeling better about the market, as the CME Live Cattle contracts posted a healthy rally. More cattle feeders were in the market this week, ready to receive cattle and willing to give more to get these Western North Dakota calves bought,” explained the AMS reporter at Thursday’s Stockmen’s Livestock Exchange in Dickinson, ND. Steer calves there sold $7-$10 higher and heifer peers traded $2-$5 higher.

Nationwide steers and heifers sold from $3/cwt. lower to $2 higher, with limited numbers of yearlings trading steady to $3 higher, according to the Agricultural Marketing Service (AMS).

Winter weather through the Southern Plains reduced auction receipts by 61,000 week to week and direct trade by 16,000.

Feeder Cattle futures closed an average of $6.91 higher week to week on Friday, from $4.57 to $8.57 higher, not counting recently expired spot Oct or newly minted away Oct.

Besides being oversold, Feeder Cattle received support from sharply lower Corn futures, which were pressured by profit taking and the stronger U.S. Dollar, as well as improved growing conditions in Russia and South America. Week to week on Friday, Corn futures closed an average of 14¢ lower through the front six contracts.

The CME Feeder Cattle Index was $2.75 higher week to week on Thursday at $136.76.

Notwithstanding last week’s widespread moisture, David Anderson, Extension livestock economist at Texas A&M University notes drought conditions will likely impact feedlot placements for the remainder of this year.

In the latest issue of In the Cattle Markets, Anderson explains challenges to wheat pasture development, along with drought in the West and in Texas could force increased feedlot placements. At the same time, he says more feeder cattle imports from Mexico add to the supply.

Fed Cattle Prices Tread Water

Negotiated cash fed cattle prices were mainly steady to lower last week, based on data from the Agricultural Marketing Service.

Prices were steady in the Southern Plains at $106/cwt., $2 lower in Nebraska at $103 and steady to $4 lower in the western Corn Belt at $101-$103. Dressed prices the previous week were at $162-$166.

The average five-area direct steer price through Thursday was $104.16/cwt. on a live basis, which was 14¢ more than the previous week, but $7.75 less than the same week last year. The average dressed steer price of $159.70 was $4.27 less than the prior week and $17.89 less than the previous year.

Live Cattle futures closed an average of $3.86 higher week to week on Friday, from $2.62 higher in expiring spot Oct to $4.72 higher.

Total estimated cattle slaughter for the week of 638,000 head was 5,000 head fewer than the previous week and 21,000 head fewer (-3.2%) than the same time last year. Year-to-date estimated total cattle slaughter of 26.7 million head is 1.1 million head fewer (-3.8%) than a year earlier. Beef production of 537.3 million lbs. for the week was 4.1 million lbs. less than the previous week and 4.7 million lbs. less than a year earlier. Year-to-date estimated beef production of 22.2 billion pounds is 256.7 million lbs. less (-1.1%) than a year earlier.

Of regional interest, Andrew P. Griffith, agricultural economist at the University of Tennessee notes the significant increase in fed cattle flowing into Mexico from South Texas.

“Since the first week of July, over 10,000 head of beef cattle for slaughter have been exported to Mexico compared to 134 head for the first 10 months of 2019. These are some of the highest volumes of cattle being shipped to Mexico for slaughter since the early 2000s,” Griffith says, in his weekly market comments. “From a national standpoint, the export of these animals does little to influence the market, but it greatly influences cattle feeders in South Texas where Brahman and Brahman influenced cattle are mainstays.”

The average dressed steer weight for the week ending Oct. 17 was 929 lbs., which was 1 lb. heavier than the prior week and 29 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 850 lbs. was 4 lbs. heavier than the prior week and 19 lbs. heavier than the previous year.

Choice boxed beef cutout value was 61¢ higher week to week on Friday at $208.10/cwt. Select was 16¢ lower at $191.24.

Given ongoing sluggishness in the wholesale beef market, Griffith explains it’s difficult to tell the level of stability.

“It is also difficult to say boxed beef prices are turning the corner and are going to show consistent week-over-week gains. Seasonally speaking, it is good to be exiting October….this generally marks the time when retailers begin making orders for end of the year holiday events. The issue is that these purchases may be muted relative to previous years since the restaurant and food service industry is practically a no-go zone for many consumers,” Griffith says. “Many businesses have already canceled social celebrations and there is considerable encouragement by health officials to minimize holiday gatherings for families. This will definitely keep beef from moving at the same pace it traditionally does. However, I am sure there will still be consumers who choose to make prime rib the centerpiece of their Christmas meal.”

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

*Thursday-to Thursday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Futures and cash cattle prices took a strong step lower last week, pressured by higher grain prices, dwindling forage and stagnant wholesale beef values.

Nationwide, steers and heifers sold $4-$8/cwt. lower, according to the Agricultural Marketing Service (AMS). The CME Feeder Cattle Index was down $6.21 week to week on Thursday, to the lowest level since July.

The AMS reporter on hand for Tuesday’s sale at Miles City Livestock Commission in Montana aptly described the overall market:

“Calves continue to sell out of extremely dry country and are light fleshed and lightweight as a result. CME positions sold off sharply early in the week and buyers adjusted prices to fit lower breakevens reflective of lower Live Cattle contracts. This coupled with higher grain prices created sharply lower prices this week. Calves preconditioned with two rounds sold with the best demand and sold with an $8.00-10.00 premium over calves with only spring vaccinations.”

Week to week on Friday, Corn futures closed an average of 14¢ higher through the front four contracts (Dec-Jly ’21). Those same contracts increased an average of 30¢ in the last three weeks.

Week to week on Friday, Soybean futures closed an average of 28¢ higher through the front six contracts.

Feeder Cattle futures closed an average of $3.24 lower week to week on Friday, from $1.72 lower at the back to $5.37 lower toward the front.

Feedlot Placements Up 6%

Feedlot placements in September of 2.23 million head were 124,000 head more (+5.9%) than the same time last year, according to the monthly Cattle on Feed report issued Friday. That was about 3% more than expectations ahead of the report.

Keep in mind the report accounts for feedlots with 1,000 head or more capacity.

Placements of 2.23 million head in September were 124,000 head more (+5.9%) than the same time last year. That was about 3% more than expectations ahead of the report. In terms of weights 36% went on feed weighing 699 lbs. or less, 46% weighing 700-899 lbs. and 18% weighing 900 lbs. or more.

Marketings of 1.85 million head in September were 108,000 head more (+6.2%) year over year, a touch more positive than expectations.

Cattle on feed Oct. 1 of 11.72 million head were 429,000 head more (+3.8%) than the previous year. That’s the most for the date since the data series began in 1996 and a little more than what the trade anticipated.

Fed Cattle Prices Drift Lower

For the week, negotiated cash fed cattle prices were $2 lower on a live basis in the Southern Plains at $106/cwt.; $3-$4 lower in Nebraska at $104-$105 and $2 lower in the western Corn Belt at $103-$105. Dressed prices were $4-$7 lower in Nebraska at $162-$165 and $3-$4 lower in the western Corn Belt at $163-$165.

Through Thursday, the five-area direct weighted average steer price was $105.11/cwt. on a live basis, which was $2.50 less than the same period last week and $4.74 less than a year earlier. The average dressed steer price of $163.97 was $4.43 less than the previous week and $10.91 less than last year.

Live Cattle futures closed an average of $3.31 lower week to week on Friday ($1.45 lower at the back to $5.05 lower toward the front).

“Finished cattle prices took a hit this week with no apparent driver for the price decline. All that can be said is that October Live Cattle futures declined more than $3/cwt. on Monday and then floundered at that level the rest of the week,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

“Maybe the price decline on the futures market, which was followed by cash trade, was due to expectations associated with the monthly Cattle on Feed report. It is sometimes difficult to know what is driving prices one way or the other, because many of the changes in prices are based on expectations and incomplete information. Information is constantly flowing and futures traders and those buying and selling cattle are evaluating this information in real time, which influences how they value animals.”

Total cattle slaughter the week ending Oct. 10 was 637,073 head, according to USDA’s Actual Slaughter Under Federal Inspection report. That was 26,074 head fewer (-4.02%) than the previous week and 11,205 head fewer (-1.73%) than the previous year. Total fed cattle slaughter of 502,345 head was 22,199 head fewer than the prior week (-4.23%) and 7,117 head fewer (-1.40%)than the same week last year.

The average dressed steer weight for that week of 928 lbs. was 4 lbs. more than the previous week and 27 lbs. more than the prior year. The average dressed heifer weight of 846 lbs. was 3 lbs. more than the previous week and 18 lbs. more than a year earlier.

Wholesale Beef Values Drag

Choice boxed beef cutout value was $2.54 lower week to week on Friday at $207.49/cwt. Select was $2.12 lower at $191.40.

Griffith points out commercial beef production through the first nine months of the year was just 60 million pounds less year over year (-0.3%).

“The quantity of beef in cold storage is an indicator that beef continues to move rapidly and that consumers continue to demand beef,” Griffith says.

The 461.99 million lbs. of beef in cold storage Sept. 30, was 3% more than the previous month but 6.99 million lbs. less (-1.5%) than the same time last year, according to USDA’s latest Cold Storage report.

Frozen pork supplies were up slightly from the previous month but down 22% from last year.

Total red meat supplies in freezers were up 1% from the previous month but down 13% from last year.

Total frozen poultry supplies were down 2% from the previous month and down 3% from a year ago.

“The latest beef export data further supports the demand statement in that U.S. beef and veal exports have recovered nicely from the pandemic with August 2020 export quantities exceeding year-ago levels,” according to Griffith. “Another supporter of beef movement could be the international pull for pork as China continues to demand large quantities of pork, as they continue their recovery from African Swine Fever.”

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

*Thursday-to Thursday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Continued weakness in wholesale beef values, increasing demand uncertainty and recently resurgent grain prices weighed on cash and futures cattle prices.

Nationwide, steers and heifers sold steady to $3/cwt. lower, according to the Agricultural Marketing Service (AMS) with the strongest demand for remaining yearlings.

“Demand for calves continues to be very dependent upon the health program of the originating producer,” say AMS analysts. “The week ended with much cooler temperatures as an Arctic blast brought frost to a good portion of the Plains.  Lack of moisture continues to avoid the areas that need it the most and the drought areas are slowing intensifying each week.” 

“Feedlots are navigating a tough stretch as it relates to markets and cattle movement. From the market standpoint, cattle feeders are experiencing strong margins, but they need to move cattle to make pen space for some of the high-risk cattle that make their way to the feedlot this time of year,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “With fairly inexpensive calves available, feedlot managers would like to capitalize on the strong margins that are available now and place some cattle on feed that have a strong probability of being profitable moving into the second quarter of 2021. These are both good problems, but they still have to be navigated.”

Feeder Cattle futures closed an average of $2.98 lower week to week on Friday, from 15¢ lower in spot Oct to $4.67 lower. That makes for an average of $6.35 lower during the past two weeks.

Although prices for 4-weight and 5-weight cattle remains comparable to the spring, Stephen Koontz, agricultural economist at Colorado State University says, “Basis for these lightweight animals is soft and the market is rather clearly communicating, for producers who can feed calves for another month or two, that delaying marketing should be considered.”

In a recent issue of In the Cattle Markets, Koontz also explains, “The COVID impacts on the fed cattle market continue to almost have entirely run their course. Marketings have been reasonably strong. The number of long-fed cattle are down off their peaks in June and high inventories in the surrounding months of May and July.”

Fed Cattle Prices Stall

For the week, prices were $1 lower on a live basis in the Southern Plains at $108/cwt.; steady to $1 lower in Nebraska at $107-$108/cwt.; steady to $3 lower in the western Corn Belt at $105-$107. Dressed prices were $1 lower in Nebraska at $169 and $1-$3 lower in the western Corn Belt at $167-$168.

Live Cattle futures closed an average of $2.26 lower week to week on Friday ($1.22 lower at the back to $3.97 lower toward the front).  Live Cattle open interest declined by 13,712 contracts week to week on Thursday.

Estimated total cattle slaughter for the week ending Oct. 17 was 654,000 head, according to USDA. That was 17,000 more than the previous week and 11,000 head (+1.71%) more than the same week last year. Year-to-date estimated total cattle slaughter is 25.47 million head, which would be 1.04 million head fewer (-3.92%) than the same time last year. Estimated total beef production so far this year is 21.12 billion lbs., which would be 272.6 million lbs. less (-1.27%) than the same time last year.

Meanwhile, actual total cattle slaughter for the week ending Oct. 3 of 663,777 head was 19,101 head more (+2.96%) than the same week last year. Total fed steer and heifer slaughter under federal inspection of 524,544 head was 20,836 head more (+4.14%) than the prior year. The average dressed steer weight for the week was 924 lbs., which was the same as a week earlier but 25 lbs. heavier than a year earlier. The average dressed heifer weight of 843 lbs. was 5 lbs. heavier than the prior week and 19 lbs. heavier than last year.

Net U.S. beef export sales for 2020 totaled 13,400 metric tons the week ending Oct. 8, according to the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service. That was 35% less than the previous week and 34% less than the previous four-week average. Increases were primarily for Japan, Mexico, South Korea, Taiwan and Canada. Net beef export sales for 2021 were 5% less than the previous week and 1% less than the prior four-week average.

Beef Prices Step Lower

Wholesale beef prices continue lower, under seasonal pressure, as well as growing uncertainty about the potential impact of resurgent COVID cases.

Choice boxed beef cutout value was $4.03 lower week to week on Friday at $210.03/cwt. Select was $6.30 lower at $193.52. Over the last two weeks, Choice is $8.85 lower and Select is down $14.09.

“As packers and retailers look forward to holiday beef sales, most have tempered expectations,” Griffith says. “It is difficult to know at this time if consumers will open their wallets to pay for high valued cuts of beef for the holiday gatherings or if those gatherings will even occur in many instances. Many businesses and organizations have already canceled their holiday celebrations which means restaurants and food service continue to miss out on opportunities. This hits the beef industry hard as many of these gatherings include beef as the main course. It will be interesting to see if and how beef moves through the end of the year holidays and if families decide to forego beef as the centerpiece of this year’s meal. If beef movement is not strong, then the signal will be sent down the line with lower prices.”

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

*Thursday-to Thursday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Increasing volume of spring-born calves and surging corn prices pressured cash calf and feeder cattle prices last week.

Steer and heifer calves traded $1-$3/cwt. lower, while yearling steers and heifers sold steady to $1 lower, according to the Agricultural Marketing Service (AMS).

“As cattle producers bring freshly weaned calves to market in large quantities, the price of calves has come under significant pressure,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “This price pressure will persist through November as producers continue to wean this year’s calf crop.”

Dry conditions and drought are adding price pressure in some areas.

For the week of Oct. 6, 62.9% of the continental United States was classified from abnormally dry to exceptional drought, according to the U.S. Drought Monitor. That was 26% more than the same time last year.

“With larger fall runs of calves expected in October and November, the lack of wheat pasture demand may add additional seasonal pressure to calf markets this fall,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

Moreover, he says the lack of wheat pasture and other forages may change the timing of calf and feeder cattle sales this fall.

Beyond forage availability to grow cattle, AMS analysts point out drought is pushing cows to town in some areas, such as Nebraska.

“Dry conditions in the state have over 98% of the state in some sort of drought designation; the highest percentage since July 2013,” says AMS analysts. “The question moving forward will be how many cows will leave the farm and go to harvest with a rancher exposed to paying more to keep cows around this winter than he has in the past. Some winter forage piles have started being used already and the calendar shows only the middle of October.”

Feed costs are increasing, too, with the surge in corn and soybean prices.

Week to week on Friday, Corn futures closed an average of 11¢ higher through the front six contracts. That’s an average of 24¢ higher for the same contracts over the past two weeks.

In the latest monthly World Agricultural Supply and Demand Estimates (WASDE), USDA projected the season average corn price received by producers by 10¢ to $3.60/bu.

Week to week on Friday, Soybean futures closed an average of 31¢ higher through the front six contracts. That’s an average of 49¢ higher for the same contracts over the past two weeks.

WASDE forecasts increased the U.S. season-average soybean price for 2020-21 by 55¢ to $9.80/bu.

In both cases, prices are buoyed by recent USDA data lowering projections for harvested area and yield.

Feeder Cattle futures closed an average of $3.37 lower week to week on Friday, from $1.65 lower in spot Oct to $4.35 lower.

Fed Cattle Prices Continue Rise

Negotiated cash fed cattle prices extended gains last week, supported by snugger front-end supplies and indications that cattle feeders continue to erase the backlog of fed cattle.

Regionally, cash prices last week were generally $2 higher in the Southern Plains at $109/cwt. on a live basis; $1-$2 higher in Nebraska and at $108-$109 and steady to $3 higher in the western Corn Belt at $107-$110. Dressed trade was $2-$3 higher at $170.

Through Thursday, the five-area direct negotiated weighted average fed steer price was $107.59/cwt. on a live basis, which was 48¢ higher than the previous week, but $1.49 less than the same time last year. The average price in the beef of $169.29 was $1.61 more than the prior week but 79¢ less than the previous year.

“Prices are about $13/cwt. higher than their summer lows and will likely continue to slowly increase into late fall as the holiday season approaches,” Griffith says. “The fourth-quarter peak price is still expected to exceed $115 with an upper range near $120. It will be tough to reach the $120 mark, but most cattle feeders will be profitable with prices over $115. One major factor that could temper prices in the fourth quarter is a glut of cattle coming off feed in the next 10 to 12 weeks.”

However, except for an average of $1.60 higher in the front two contracts, Live Cattle futures closed an average of $1.15 lower week to week on Friday (42¢ to $1.32 lower).

In the latest WASDE USDA’s Economic Research Service (ERS) increased projected fed cattle prices for this year and next. Specifically, ERS increased the 2020 annual average price (five-area direct) by $1.41 to $108.71/cwt., compared to the previous month, with a fourth-quarter price projection of $109. That’s based on current price strength and robust beef demand.

The forecast annual average fed steer price for 2021 increased by $2 to $114. Prices are projected to be $113 in the first quarter, $110 in the second quarter and $114 in the third quarter.

That’s with a projected increase in beef production both this year and next.

ERS projects beef production for this year at 27.14 billion lbs., which was 90 million lbs. more than the previous month’s estimate. That’s based on expectations for increased slaughter in the second half of the year. The total would be 17 million lbs. less than last year. Projections for beef production in 2021 increased 10 million lbs. to 27.37 billion lbs., which would be 227 million lbs. more than this year.

In the meantime, wholesale beef values continue their seasonal slumber.

Choice boxed beef cutout value was $4.82 lower week to week on Friday at $214.06/cwt. Select was $7.79 lower at $199.82.

“Wholesale beef prices will struggle to find much support the next four to six weeks as the market moves through a soft demand time period,” Griffith explains. “Following Thanksgiving, middle meats will provide the holiday support for the market as the rib will take front and center stage. Consumer demand will be the driving factor for prices, but competing meat prices will also play a role.”

Based on the latest data, demand for U.S. beef exports is beginning to rebound.

Beef muscle cut exports in August were the largest in more than a year at 89,148 metric tons (mt), up 3.5% year-over-year, led by record-large demand in South Korea and Taiwan, according to data compiled by the U.S. Meat Export Federation (USMEF). Export value increased slightly from a year ago to $611 million.

Variety meat exports were lower year over year, though, due in part to the lack of available labor required to harvest and export some items.

Combined beef/beef variety meat exports were 109,752 mt in August, down 4.5% from a year ago. Export value was $673.8 million, down 2% from a year ago but the highest since March.

For January through August, beef muscle cut exports were 6% below last year’s pace in volume (627,248 mt) and 9% lower in value ($4.38 billion). Beef/beef variety meat exports were down 8% to 808,659 mt, valued at $4.95 billion (down 9%).

“The upward trend in muscle cut exports is very encouraging and especially critical as beef and pork production continue to rebound from the interruptions earlier in the year,” says Dan Halstrom, USMEF president and CEO. “Maintaining variety meat volumes has been especially challenging this year but we continue to expand and develop destinations for these items, which are essential to maximizing carcass value.”

Beef export value per head of fed slaughter averaged $302.82 in August, up 1% from a year ago. The January-August average was down 4% to $297.96.

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

*Thursday-to Thursday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Cattle futures took the previous week’s bearish monthly Cattle on Feed report to start the week but then received another round of pressure from the crop-friendly quarterly Grain Stocks report.

Feeder Cattle futures took the brunt, along with cash prices, to a point, while stronger cash fed cattle prices provided underpinning.

Nationwide, steers and heifers sold from $2/cwt. lower to $2 higher, according to the Agricultural Marketing Service (AMS).

“Demand remains good for yearling cattle, with light to moderate demand for fresh calves,” say AMS analysts. “Bawling and un-weaned calves continue to see discounts and are much less desirable to buyers as is typical for this time of year. Buyers are quite willing to pay premiums for cattle if producers invest time in them and provide a documented health program.”

Feeder Cattle futures closed an average of 72¢ lower week to week on Friday, with much of the pressure coming from higher grain prices.

Old crop corn stocks in all positions on Sept. 1 of 2.00 billion bu., were 10% less than a year earlier and significantly less than the trade expected, according to the aforementioned grain stocks report.

Week to week on Friday, Corn futures closed an average of 13¢ higher through the front six contracts.

Similarly, old crop soybeans stored in all positions were 42% less than a year earlier at 523 million bu., significantly less than the trade expected.

Week to week on Friday, Soybean futures closed an average of 18¢ higher through the front six contracts.

“As we work through 2020 and into 2021, feeder cattle supplies should continue to tighten modestly,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. In his weekly market comments, Peel pointed out total feedlots placements are 4.2% less than last year for the year to date, despite significant increases the last two months.

Fed Cattle Prices Gain

For the week, live sales in the Southern Plains were mostly $2 higher at $107/cwt., with a few up to $108 in the Texas Panhandle. Live prices were $2 higher in Nebraska at $107 and $2-$3 higher in the western Corn Belt at $107-$108. Dressed trade was $2-$3 higher at $167-$168.

Through Thursday, the average five-area direct steer price was $107.11/cwt. on a live basis, which was $2.08 higher than the previous week. The average price in the beef was $2.81 higher at $167.68.

Except for an average of 39¢ lower in two contracts, Live Cattle futures closed an average of 48¢ higher week to week on Friday.

“This week’s prices are still a long way from the fourth quarter target high between $115 and $120, but a $7 to $8 price improvement over the next two months is obtainable,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Reaching the afore-mentioned price target for a fourth quarter apex will likely result in strong competition for feeder cattle moving forward.”

In the meantime, Peel explains, “The July-August bulge in placements suggests higher feedlot marketings in the first quarter of 2021. July placements were skewed to the lighter weight cattle, while August placements included more heavyweight placements, which further implies that cattle could be somewhat bunched up. However, winter weather typically spreads cattle out a bit, so the exact timing is uncertain. The ripples from the first half of 2020 will extend into early 2021.”

Wholesale beef values hovered on either side of steady. Choice boxed beef cutout value was 46¢ lower week to week on Friday at $218.88/cwt. Select was 63¢ higher at $207.61.

The average dressed steer weight for the week ending Sept. 19 was 919 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. Although 23 lbs. heavier than the previous year, the average weight was 1 lb. lighter than the previous week. That was the first week-to-week decline since mid July, according to AMS.

The actual dressed heifer weight of 836 lbs. was the same as a week earlier, but 13 lbs. heaver than the same week last year.

“Boxed beef prices were in a holding pattern this week…This is fairly typical of the early fall beef market, and this pattern may persist for a few weeks,” Griffith says. “There are several factors that may influence the beef market moving through the last quarter of the year. The first would be more stimulus money being deposited in the bank accounts of American consumers. If Congress passes another substantial stimulus package, then this could result in more beef purchases as discretionary income inevitably increases… A second major factor will continue to be the export market.”

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

*Thursday-to Thursday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Pressure in outside markets for much of the week weighed on commodity futures prices. Despite stronger wholesale beef prices and higher negotiated cash fed cattle trade, Cattle futures weakened, especially Feeder Cattle on prescient queasiness about the monthly Cattle on Feed report (see below).

Feeder Cattle futures closed an average of $2.06 lower week to week on Friday (37¢ lower at the back to $2.82 lower). That was with Corn futures closing an average of 12¢ lower through the front six contracts, week to week.

Nationwide, calves and feeder cattle sold steady to $2/cwt. lower, according to the Agricultural Marketing Service (AMS).

“Supply was moderate as yearlings become harder and harder to find,” AMS analysts explain. “Demand was moderate to good with health records and the amount of flesh playing a big part in how strong demand was for new-crop calves.”

For instance, in his neck of the woods, Andrew P. Griffith, agricultural economist at the University of Tennessee says preconditioned cattle continue to sell $9-$11/cwt. higher than higher risk cattle.

“It is difficult to know how low prices will go this fall. Unfortunately, prices appear to be coming under more pressure than was previously expected,” Griffith says, in his weekly market comments. “It is prudent for producers to consider their forage resources and the opportunity of weaning calves at least 45 days and providing a complete health program. There is generally value in this type program every year, but the profit prospects may be even greater this year than in most. From the stocker perspective, there is an opportunity to purchase low cost calves and profit on the weight gain.”

Feedlot Placements Up 9%

If anything, the monthly USDA Cattle on Feed report issued Friday (feedlots with 1,000 head or more capacity) will likely be viewed as bearish, with 2.06 million head placed in August, which was 173,000 head more (+9.2%) than a year earlier. That’s about 3% more than expectations heading into the report. In terms of weights, 36% went on feed weighing 699 lbs. or less, 48% weighing 700-899 lbs. and 16% weighing 900 lbs. or more.

Marketings in August of 1.89 million head were 61,000 head fewer (-3.1%) than last year, in line with expectations.

Cattle on feed Sept. 1 of 11.39 million head were 412,000 head more (+3.8%) than a year earlier, which was the most for the date since the data series began in 1996.

Fed Cattle Prices Creep Higher

Negotiated cash fed cattle prices ended the week generally $2 higher on a live basis at mostly $105/cwt. in the five-area feeding region, according to the Agricultural Marketing Service. Dressed trade was $1-$2 higher at mostly $165.

Through Thursday, the five-area direct weighted average steer price was $105.03/cwt. on a live basis, which was $1.49 higher than the previous week. The average steer price in the beef was $164.87, which was $1.94 higher.

“…most casual observers would not consider these prices to be highly profitable because of how low they are relative to recent history. However, current prices have many cattle feeders in triple digit profits, because the cattle coming off feed were purchased at extremely low prices during the spring,” Griffith explains. “These profits will not immediately result in higher feeder cattle prices, as many cattle feeders are looking for some reserves. If these profits persist for a little while, then it will eventually result in support for the feeder cattle market, and that may not show up until winter.”

Except for 22¢ higher in spot Oct, Live Cattle futures closed an average of $1.05 lower week to week on Friday, from 20¢ lower to $1.62 lower.

Cattle slaughter of 2.80 million head in August was 4% less year over year. Beef production of 2.33 billion lbs., was 2% less than a year earlier; there was one more weekday in August last year.

“Steer and heifer slaughter remain well below year ago levels with year-to-date heifer slaughter down 3.7% compared to the same weeks in 2019; steer slaughter is 4.9% below year-ago levels,” Griffith says. “Despite the lower slaughter rates, federally inspected beef production year-to-date is only down 1.2% because carcass weights have been well above last year’s carcass weights since the beginning of the year.”

Estimated total cattle slaughter last week was 651,000 head, according to AMS. That was 6,000 head more than the previous week and 1,000 head more than the same week last year. Year-to-date estimated total cattle slaughter of 23.51 million head is 1.07 million head fewer (-4.3%) than the same period last year.

Choice Boxed Beef Prices Higher

Wholesale beef value appeared to turn the seasonal corner last week.

Choice boxed beef cutout value was $3.70 higher week to week on Friday at $219.34/cwt. Select was $3.04 higher at $206.98.

Estimated year-to-date beef production of 19.81 billion lbs. is 335.5 million lbs. less (-1.69%) than last year.

“Given strong beef production and relatively strong boxed beef prices, it would appear that beef demand remains strong despite many consumers having reduced incomes during the coronavirus pandemic,” Griffith says.

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

*Thursday-to Thursday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities