Last week, the five-area direct weighted average steer price was $105.09/cwt. on a live basis, which was $1.50 lower than the previous week. The weighted average dressed steer price of $166.53 was $2.88 less.
Cattle futures closed higher for the first time in four sessions on Monday, despite softer wholesale beef values and the outlook for cash prices to continue lower this week; perhaps helped along by month-end position squaring.
Live Cattle futures closed an average of 61¢ higher, from 35¢ higher at the back to $1.27 higher in expiring Aug.
Feeder Cattle futures closed an average of 45¢ higher.
Choice boxed beef cutout value was $1.45 lower Monday afternoon at $227.95/cwt. Select was 46¢ higher at $215.32.
Corn futures closed mostly 1¢ to 2¢ lower.
Soybean futures closed mostly 3¢ to 5¢ higher.
Major U.S. financial indices closed mixed on Monday, with most of the support continuing to come from tech stocks.
The Dow Jones Industrial Average closed 223 points lower. The S&P 500 closed 7 points lower. The NASDAQ closed 79 points higher.
Early on, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says winter grazing prospects appear promising in the Southern Plains. In Oklahoma, for instance, he says conditions range from very dry to adequate moisture with generally favorable soil temperatures.
“Current feeder cattle prices provide an indication of the economic prospects for fall and winter grazing. In the last week of August, the Oklahoma average auction price for 475-lb. steers was $165.25/cwt. with 750 lb. steers at $140.40/cwt. This calculates to a value of gain of $0.975/lb. for 275 lbs. of gain,” Peel explains. “Across beginning weights of 450-600 lbs., the value of gain ranges from $0.90 to $1.00/lb., using current auction prices. Cost of production is likely less than $0.90/lb. in many cases, suggesting potential positive returns for stocker production.”
According to Peel, a common wheat pasture grazing budget is based on October stocker purchases with feeders marketed in early March, including roughly 120 days of winter grazing. Based on current market conditions, he projects the October price at $160-$165/cwt. for steers weighing 475 lbs. Across various budgets using a range of purchase prices, feed costs, and average daily gain, March breakeven prices are projected at $129-$139/cwt., most likely $132-$136. That’s for steers weighing about 750 lbs. Current Feeder Cattle futures for March, adjusted for Oklahoma basis, suggest a March price of about $140/cwt. at 750 lbs. So, he says, current market conditions suggest some potential for winter grazing returns above production costs.
“General economic uncertainty and volatility will continue to be particularly important in cattle markets and risk management should be carefully considered,” Peel says. “Futures markets may offer an opportunity to lock in a margin on winter grazing. However, risk management requires deliberate action to implement a plan. Market opportunities are often fleeting and producers may have to act quickly to take advantage of changing market conditions.”