Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, but early trades hinted at steady to higher money.
Although too few to trend, early live sales were reported at $109/cwt. in the Southern Plains and Nebraska. That was $1 higher in the south and steady with the lower end of last week’s range in Nebraska.
Likewise, one lot (131 head) of heifers in Texas sold for a weighted average price of $109, for delivery at 1-9 days, in the weekly Fed Cattle Exchange auction. There was only one other lot in the sale, which was passed on at $105.
Choice 2-4 steers (308 head) and averaging 1,414 lbs. sold for an average of $112.83 at the fat auction in Tama, IA. That was $1 higher than the top of last week’s country trade.
Cattle futures took a step higher Wednesday, supported by the seasonal surge in wholesale beef values and the previous day’s Cold Storage report.
Except for 32¢ higher in spot Oct, Live Cattle futures closed an average of $1.09 higher.
Feeder Cattle futures closed an average of $1.35 higher.
Wholesale beef values were sharply higher on Choice and higher on Select, with light to moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $2.35 higher Wednesday afternoon at $223.28/cwt. Select was 86¢ higher at $198.94.
Corn futures closed unchanged to fractionally lower.
Soybean futures closed mostly fractionally lower.
Major U.S. financial indices closed higher Wednesday on mostly positive quarterly earnings reports.
The Dow Jones Industrial Average closed 45 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 15 points.
Cow-calf profitability may begin turning the corner next year, according to analysts with the Livestock Marketing Information Center, in the latest Livestock Monitor. Currently, LMIC projects typical returns over cash costs, plus pasture rent (basis, the Southern Plains) at $70-$85/cow in 2020 and 2021.
Heading into cyclically higher returns, however, estimated returns continue to represent a loss.
“Overall, this year’s estimated cow-calf returns over cash costs plus pasture rent for the Southern Plains is projected to be negative and the worst since 1996 (unadjusted for inflation),” say LMIC analysts. “Three out of the last four years have been in the red.”
On the cost side of the equation, LMIC projects that Southern Plains cash costs plus pasture rent at more than $850 per cow.
On the revenue side, LMIC projects prices for steer calves (600 lbs.) sold August-November to be 5.5% to 6.0% less than the same time a year earlier; about $9/cwt. less. That’s based on information from USDA’s Agricultural Marketing Service through mid-October.
“That will be the lowest since 2016,” say LMIC analysts. “So far this year, cull cow prices averaged over $10/cwt. below 2018’s, and for the full year, are expected to be the lowest since 2009.”
Keep in mind, LMIC estimates are not survey-based. LMIC analysts emphasize calculations only include cash costs of production and pasture rent; owner management, labor, etc., are not included. The calculations are based on a typical fulltime spring-calving, fall-weaning Southern Plains operation.
“The returns are useful only in a general context,” say LMIC analysts. “The LMIC uses those estimates because producer return is a key factor influencing national herd growth/contraction.”