Negotiated cash fed cattle trade was mostly inactive on very light demand in the western Corn Belt through Monday afternoon. Elsewhere, it was at a standstill, according to data from the Agricultural Marketing Service (AMS). Last week, 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.
Cattle futures closed sharply higher on Monday, shaking off last week’s blues with the help of higher outside markets and an apparently bullish view of Friday’s Cattle on Feed report.
Live Cattle futures closed an average of $1.99 higher.
Feeder Cattle futures closed an average of $2.83 higher.
Choice boxed beef cutout value was $3.25 higher Monday afternoon at $241.60/cwt. Select was $2.50 higher at $217.48.
Corn futures closed mostly 3¢ to 5¢ higher
Soybean futures closed 10¢ to 12¢ higher through Aug ’21 and then mostly 4¢-7¢ higher.
Major U.S. financial indices closed higher Monday, buoyed by the third COVID-19 vaccine candidate that proved at least 90% effective in trials. Traders also seemed optimistic about Janet Yellen, former Federal Reserve Chair, being named Treasury secretary by president-elect Biden.
The Dow Jones Industrial Average closed 327 points higher. The S&P 500 closed 20 points higher. The NASDAQ was up 25 points.
“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,” says 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.”
By way of illustration, Peel graphed (see chart below) Oklahoma calf and feeder steer prices by weight from August through Nov. 20.
After posting lows during the winter storm in late October, he explains prices for steer calves and stockers weighing less than 600 lbs. increased sharply; little change at heavier weights.
“The result is a sharper bend in the price-weight line, with an even steeper price rollback for steers up to 600 pounds,” Peel says. “Using a stocker gain of 250 lbs. from 500 to 750 lbs., the value of gain in August was $1.02/lb. In October, the value of gain was slightly higher at $1.05/lb. based on lower prices for both 500 and 750-lb. steers. In November, the higher prices for the lightweight animals resulted in a lower value of gain of $0.74/lb. Of course, a 500-lb. stocker purchased now will not reach 750 lbs. for some time. However, March Feeder futures price was $134.48 recently. That with an expected early March basis of $1.69/cwt. for 750-lb. steers in Oklahoma suggests a final price of $136.17/cwt., close to the current cash price of $136.03/cwt.”
For cow-calf producers selling calves at weaning, he explains 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 says. “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.”