Last week’s 5-area direct fed steer price was $2.00 lower on a live basis at $110.98/cwt. and $2.23 lower dressed at $175.73.
Softer cash prices helped pressure Cattle futures closed lower Monday, especially nearby contracts, while stronger wholesale beef values offered support.
Live Cattle futures closed an average of $1.08 lower through the front three contracts and then an average of 48¢ lower.
Feeder Cattle futures closed an average of $1.16 lower in the front two contracts and then an average of 43¢ lower.
Boxed beef cutout values were higher on good demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.82 higher Monday afternoon at $208.43/cwt. Select was $1.89 higher at $199.66.
*******************************
Major U.S. financial indices closed lower Monday, pressured once again by Turkey’s financial crisis and fears or rippling economic turbulence.
The Dow Jones Industrial average closed 125 points lower. The S&P 500 closed 11 points lower. The NASDAQ was down 19 points.
*******************************
Stocker demand will be the key to calf prices this fall, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. He points out forage conditions will determine the degree to which stockers can demand calves, while economic conditions will dictate their willingness to do so. That could be the difference between seasonal declines in calf prices or steeper reductions based on more cattle numbers.
“Prices for feeder cattle typically decline seasonally for all weight classes after August,” Peel explains. “Calves and stockers up to 600 lbs. (which peak in March) typically have a seasonal low price in October, while heavier feeder cattle decline from an August peak lower through the end of the year. On average, feeder cattle prices decline 4-5% from August to lows in the fourth quarter.”
All indications are that more cattle will be available through the fall this year than last. For instance, Peel points to the mid-year Cattle report indicating a calf crop this year nearly 2% more than in 2017 and estimated feeder supplies 0.5% larger.
That’s why the importance of price-supporting stocker will be magnified this year. So far, value of gain suggests stocker operators have economic incentive to buy calves.
Peel ran the numbers for Oklahoma the first week of August and came up with a value of gain of $1.19/lb. for adding 319 lbs. to a steer calf weighing 465 lbs. and purchased at $171.59/cwt. and then selling at 774 lbs. for $150.65.
“Value of gain for added feeder cattle weight is largely a reflection of feedlot demand for feeder cattle of various weights,” Peel says. “A value of gain at this level indicates relatively less feedlot demand for lightweight feeders and is an economic signal for increased stocker production. If feeder cattle prices maintain a similar price relationship into the fall and forage conditions are good, fall feeder markets may follow seasonal price patterns rather closely.”