It took all of last week to get cash fed cattle traded, but it was well worth the wait. Prices were mainly $5-$8 higher on a live basis at mostly $116.00-$119.50/cwt. Dressed prices were mainly $5-$10 higher at $180-$185.
Those significantly higher cash prices fueled sharp gains in Cattle futures on Monday, with Live Cattle in the lead.
Live Cattle futures closed an average of $2.82 higher through the front three contracts ($1.70 to $4.20 higher) and then an average of 69¢ higher (35¢ to 32¢ to 97¢ higher).
Feeder Cattle futures closed an average of $1.30 higher ($1.07 to $1.85 higher).
Choice boxed beef cutout value was 28¢ lower Monday afternoon at $203.02/cwt. Select was $1.16 higher at $193.64.
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Major U.S. financial indices closed lower on Monday. Key pressure was apparently tied to a report that proposed tax reform could include a gradual reduction in the corporate tax rate, rather than an immediate and full break to lower levels.
The Dow Jones Industrial Average closed 85 points lower. The S&P 500 closed 8 points lower. The NASDAQ closed 2 points lower.
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“Cow-calf producers are selling weaned calves for $150 to $200 per head more than last year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.
Besides calf and feeder cattle prices being significantly higher than last year, he explains price levels for heavier feeders, relative to stocker weights, are boosting the value of gain.
“Heavy feeder cattle prices have not declined seasonally; rather, they have increased this fall,” Peel says. “Seven-weight steers were up about 6% in October from August and were 25% higher than last year. An increase in heavy-feeder price, relative to stocker price, increases the value of gain and is a stocker signal to put more weight on cattle in the country.”
For instance, he ran the numbers at the end of October for adding 250 lbs. to a steer calf weighing 500 lbs. The value of gain was $1.35/lb. He also notes Feeder Cattle futures continued to offer opportunities to lock in favorable margins.
“March Feeder futures at the time of writing this article were about $153/cwt., suggesting a rare margin opportunity for winter grazing,” Peels says. Stocker producers and cow-calf producers with potential to retain weaned calves as stockers, should pencil out the opportunities depending on beginning weight and expected timing and weight of later sales. While cash market fundamentals are solid, spring Feeder futures are arguably overpriced and subject to correction at any time. The best opportunities may be fleeting.”