Cash cattle price were generally mixed to steady last week as more calves make their way to town and as fed cattle keep slugging for extra traction.
“Seasonal weakness in the calf market is evident as producers have been setting wheels under calves the past several weeks at a rapid pace,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “…As more calves make their way to the market, stocker producers become more selective in the cattle they will pay a premium for. Freshly-weaned calves tend to have an increased incidence of sickness this time of year as weaning stress is compounded by large temperature swings. From the stocker perspective, there is an opportunity to profit on calves being purchased and sold in truckload lots. The value of gain for an October purchase of a 525-pound steer and the sale of an 825-pound steer in March is $1.42 per pound with a 5% death loss. That is favorable math.”
Feeder Cattle futures closed an average of $1.99 lower on Friday (83¢ to $2.68 lower). Week to week, they were an average of $2.54 lower, amid profit taking from recent gains, slack interest, stagnant cash prices and skittishness about the monthly Cattle on Feed report. They received added pressure from resurgent Corn futures, which closed an average of 11¢ higher through the front six contracts week to week on Friday, with strong export demand.
However, Feeder Cattle perked up on Monday in response to the Cattle on Feed report. More on those numbers momentarily.
As mentioned in Cattle Current last week, in the monthly Livestock, Dairy and Poultry Outlook, ERS increased the projected annual average feeder steer price for next year by 50¢ to $155.50, based on expectations of tighter feeder cattle supplies in the second half of the year. Prices are forecast to average $153.00 in the first quarter, $151 in the second and $156.00 in the third quarter.
Although there was some uptick on live prices in the North, negotiated cash fed cattle prices last week were mainly steady.
Regionally, trade last week, trade was at $124.00/cwt. on a live basis in the Southern Plains, $124.00-$126.50 in Nebraska and $124-$125 in the western Corn Belt. Dressed trade was at $196.
The five-area average direct fed steer price was 55¢ higher at $124.39/cwt. The average five-area price in the beef was 29¢ higher at $195.99.
“Cattle feeders and the industry have to be expecting prices to break one way or the other,” Griffith explains. “They will certainly do it, but the timing of such a price movement is becoming more difficult to decipher with week-after-week of steady prices.”
Live Cattle futures closed an average of $1.41 lower week to week on Friday, except for 5¢ higher in the back contract.
ERS projected the annual average fed steer price for next year at $128.75, compared to this year’s expected average of $121.06. Average prices are forecast at $130.00 in the first quarter, $128 in the second and $126.00 in the third quarter.
In the meantime, wholesale beef prices continue to show signs of turning the seasonal corner. Choice boxed beef cutout value was $1.58 higher week to week on Friday at $281.82/cwt. Select was $2.49 higher at $263.11.
Major U.S. financial indices closed mixed on Friday. Tech stocks were pressured by Snap Inc. issuing a warning on ad spending, which took more than $100 billion in market value from various social media companies.
Also pressuring stocks was Fed a warning from Federal Reserve Chair Powell that U.S. inflation is likely to last into next year and that it was, “time to taper.” Overt the weekend, Treasury Secretary Janet Yellen echoed Powell, saying she expected inflation to remain through mid-year 2022.
The Dow Jones Industrial Average closed 74 points higher. The S&P 500 closed 5 points lower. The NASDAQ was down 126 points.
For feedlots with 1,000 head or more capacity, according to the latest Cattle on Feed report, there were 2.16 million head placed in September, which was 64,000 fewer year over year (-2.9%). That was 4.1% fewer than the average of analyst estimates ahead of the report.
Marketing’s in September of 1.79 million head were 3.1% less than a year earlier, which was 0.4% less than average estimates.
Cattle on feed Oct. 1 of 11.55 million head was 167,000 head fewer than the previous year. That was 1.43% less. Average estimates ahead of the report saw a decline of 0.5%. The total was the second largest for the date since the data series began in 1996.