Negotiated cash fed cattle trade and demand were moderate in Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service. Live sales were $3 lower than last week at $104-$105/cwt. Dressed sales were $4-$7 lower at $162-$165. Earlier in the week, live sales in the Southern Plains were $2 lower at $106.
Cattle feeders offered 1,096 head in the weekly Fed Cattle Exchange auction. Of those, 702 head—four lots from the Southern Plains—sold: 558 head for a weighted average price of $106.50/cwt. on delivery at 1-9 days; 144 head for a weighted average price of $106.25 on delivery of 1-17 days.
Choice steers and heifers sold $1.00-$1.50 lower at the fat auction in Tama, IA. There were 159 Choice 2-4 steers weighing an average of 1,410 lbs. selling for an average price of $105.23. That was steady to $2 lower than country trade in the region last week.
Cattle futures continued to stabilize Wednesday, closing narrowly mixed, with continued pressure from grain prices, as well as demand uncertainty and wonderments about the monthly Cattle on Feed report due out on Friday.
Live Cattle futures closed an average of 40¢ lower, except for unchanged and 30¢ higher in the back two contracts.
Feeder Cattle futures closed from an average of 27¢ higher in five contracts to an average of 33¢ lower.
Choice boxed beef cutout value was $2.13 lower Wednesday afternoon at $208.47/cwt. Select was 76¢ lower at $190.91.
Corn futures closed 1¢ to 5¢ higher through Sep ’21 and then mostly 1¢ to 3¢ lower.
Soybean futures closed 4¢ to 8¢ higher through Sep ’21 and then mostly 2¢ higher.
Major U.S. financial indices closed lower Wednesday, with pressure from unresolved economic stimulus talks and election uncertainty.
The Dow Jones Industrial Average closed 97 points lower. The S&P 500 7 points lower. The NASDAQ down 31 points.
Current markets offer promising value of gain across a wide range of weights, according to Brenda Boetel, agricultural marketing specialist at the University of Wisconsin-River Falls.
“Relative weights are the largest driving factor for the relationship between feeder cattle prices,” Boetel explains, in the latest issue of In the Cattle Markets. “The normal relationship between different cattle prices is for prices per hundredweight to decline when cattle weights increase. This price slide is because the prices reflect what it costs to add weight to the animal. The price slide is a big indicator for gross margin, or value of gain, for stocker production.
“Currently, the value of gain is a bit stronger for gains towards the heavy end of feeder weights. A 650-lb. beginning weight has a value of gain of $1.19/lb. for 300 lbs. of gain up to 950 lbs., whereas a 450-lb. beginning weight has a value of gain of $1.11/lb. for 300 lbs. of gain up to 750 lbs. These values suggest that stocker producers have considerable flexibility about what weight to buy and how much weight to put on stocker cattle at this time.”
She notes the above analysis does not indicate profit potential. It assumes the same prices for all weights at completion of the stocker period as when purchased. So, the question is what prices levels could be early next year.
“June to September 2020 saw larger feedlot placements compared to 2019, indicating larger fed cattle supply for early 2021 than previously anticipated. Feedlots looking to fill lots in early 2021, coupled with two consecutive years of declining calf crops provides the potential for heavyweight feeder cattle prices to remain steady to slightly higher than fall 2020 prices,” Boetel says. “Given the drought in the West, the forage availability is the biggest challenge for southern and western stocker cattle. Many of these operations will likely not have adequate forage this winter, indicating that heavyweight feeder cattle supply for spring may be tighter than anticipated as lightweight animals are placed directly on feed this winter. If heavyweight feeder cattle prices remain stable and if the producer has adequate forage available, there is some potential for profit from stocker cattle this winter.”
Boetel emphasizes producers need to analyze their own costs and revenue potential. Wisconsin Extension has some decision tools available here.