Negotiated cash fed cattle trade ranged from a standstill to mostly inactive with very light demand through Monday afternoon, according to the Agricultural Marketing Service. Prices last week were generally steady. Live sales were at $121/cwt. in the Southern Plains, $123-$126 in Nebraska and $125-$126 in the western Corn Belt. Dressed sales were at $198 in Nebraska and at $198-$203 in the western Corn Belt.
Live Cattle futures rode surging wholesale beef values higher through nearby contracts.
Choice boxed beef cutout value was $4.97 higher Monday afternoon at $329.80/cwt. Select was $5.53 higher at $303.55/cwt.
Live Cattle futures closed an average of 81¢ higher through the front three contracts on Monday and then an average of 45¢ lower.
Feeder Cattle futures softened on likely profit taking and wariness about sustained strength. They closed an average of 71¢ lower, except for 17¢ higher toward the back of the board.
Corn futures closed 2¢ to 4¢ lower through new-crop contracts, and then mostly fractionally lower to 1¢ higher.
Soybean futures closed mostly 3¢ to 5¢ higher.
Major U.S. financial indices closed mixed on Monday. Investors look to Tuesday’s town hall with Federal Reserve Chairman Jerome Powell for possible signals on how and when the Fed may taper bond buying.
The Dow Jones Industrial Average closed 110 points higher. The S&P 500 12 points higher. The NASDAQ closed 29 points lower.
Although production costs are unknown at this time, especially the cost of wheat pasture, early budgets suggest decent return potential for fall stocker programs, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.
Using prices in his state, Peel explains over the last four weeks 450 lb. steers (Med. and Lg. #1) averaged $186.08/cwt., while 750 lb. steers averaged $156.31. That adds up to $1.12/lb. for 300 lb. of gain.
“Values of stocker gain are higher this year and reflect the increased feedlot cost of gain due to high feed grain prices,” Peel explains. “Stocker value of gain is expected to remain elevated in the coming months. The value of gain reflects the broad market environment for adding weight to feeder cattle. Actual profitability will, of course, depend on actual purchase and sale prices and production costs for stockers.”
Further, Peel points out March Feeder Cattle futures are in the $166-$167 range. For Oklahoma producers, where basis is about $2 for 750 lb. steers, the estimated average March price is $168-$169.
“Another question for stocker producers is the expected purchase price of stocker calves later in the fall. The price of 450-500 lb. steers typically decreases seasonally from summer to an October low, dropping about 4.5% from August to October. This suggests a price of roughly $177/cwt., for 450 lb. steers in October,” Peel says. “However, cattle markets are trending higher and may offset the seasonal price patterns. Current October feeder futures plus average basis for calves suggests a price for 450 lb. steers of roughly $196/cwt. I suspect the most likely calf price for October will be between these values, perhaps in the range from $180-$190/cwt.”
Peel points out multiple factors — including the size and timing of fall calf marketings — will determine actual calf prices.
“Good pasture conditions could result in some delay in calf weaning and marketing this fall,” Peel explains. “Stocker prices will also be affected by the development, availability and supply of wheat pasture. Conditions may be favorable for early wheat planting but the threat of armyworms appears to be elevated this year.”