Firm to higher negotiated cash fed cattle prices and blooming wholesale beef values continued to support calf and feeder cattle markets last week.
Steers and heifers sold from $1 lower to $2/cwt. higher, according to the Agricultural Marketing Service (AMS), with continued strong demand for yearlings and spring calves making their first seasonal appearance at auctions.
“There are still plenty of yearlings on offer at sales this year due to the elongation of the marketing period as producers were more inclined to wait to sell after the spring’s auction price decline,” say AMS analysts. “Breakevens on fed cattle coming out of feedyards at today’s prices are tempting producers to make another turn on feeding those yearlings.”
Feeder Cattle futures closed an average of $1.56 lower week to week on Friday (80¢ lower at the back to $2.32 lower).
“The summer and fall feeder cattle futures contracts have been trading above the $140/cwt. mark since the middle of July with only a few instances of prices being below that level. This price level has provided some stability to the market and has provided cattle producers an opportunity to either market cattle at favorable prices or use a price risk management strategy to hedge a strong price for a future sell,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The stronger feeder cattle prices have helped support the calf market as well.”
Feedlot Placements Up 11%
Placements in feedlots (feedlots with 1,000 head or more capacity) during July of 1.89 million head were 188,000 more (+11.03%) than a year earlier, according to the monthly Cattle on Feed report. That was significantly more than pre-report expectations of a 6% increase. In terms of placement weight, 38.83% went on feed weighing less than 699 lbs., 47.17% went on feed weighing 700-899 lbs. and 14.0% weighed more than 900 lbs.
Marketings in July of 1.99 million head were 12,000 head fewer than last year (-0.60%), about in line with average analyst estimates ahead of the report.
Total cattle on feed Aug. 1 numbered 11.28 million head, which was 172,000 head more (+1.5%) than the same time a year earlier, a little more than expectations and the largest inventory for the month since the data series began in 1996.
Fed Cattle Steady to Higher
Based on reports from the Agricultural Marketing Service, negotiated cash fed cattle prices ended the week $2 higher in the Southern Plains at $106/cwt. on a live basis, steady to 50¢higher in the Northern Plains at $106.00-$106.50 and $2 higher in the western Corn Belt at $107-$109. Dressed trade was unevenly steady at $169.
Through Thursday, the five-area direct weighted average steer price was $106.62/cwt. on a live basis, which was $2.13 more than the previous week and $2.19 less than the same time last year, keeping in mind the market was dealing with the aftermath of the Tyson plant fire in 2019. The dressed steer price of $169.11 was $1.05 higher than the prior week, but $5.91 less the same time a year earlier.
“The difference in price between the Northern and Southern Plains has been advantageous for packers in the North to procure cattle in the South and truck them a distance,” AMS analysts explain. “Typically, cattle in the South would not be grading as well as they are now, due to a lengthened feeding period.”
Live Cattle futures closed an average of $1.32 lower week to week on Friday (55¢ lower at the back to $1.80 lower in spot Aug).
Wholesale beef values continued higher, receiving lift from retail buying ahead of Labor Day.
Choice boxed beef cutout value was $11.70 higher week to week on Friday at $225.94/cwt. Select was $9.70 higher at $208.99.
“From January through the first week of April (14 weeks), Federally Inspected (FI) beef production was 6.6% higher than the same time period in 2019. The next nine weeks had year-over-year declines in beef production to the tune of 17.9%. Each of the past 10 weeks has had year-over-year increases in beef production with a total increase of 1.8% over that time period. This resulted in 2020 beef production being down 1.7% year to date,” Griffith says.
Total estimated cattle slaughter for the week ending Aug. 22 was 652,000 head, according to USDA. That was 8,000 head more than the previous week’s estimate, but 17,000 head fewer than the same week last year. Estimated beef production for the week of 542.9 million lbs. was 10.5 million lbs. more than the previous week and 7 million lbs. more than the prior year.
Total cattle slaughter of 632,968 head was 3,336 head fewer than the prior week and 13,735 fewer than the same time last year.
The average dressed steer weight of 906 lbs. was 1 lb. heavier than the previous week and 28 lbs. heavier than a year earlier. The average dressed heifer weight of 832 lbs. was 4 lbs. heavier than the previous week and 26 lbs. heavier than the prior year.
CME to Expand Price Limits
CME Group announced proposed changes to daily and expanded daily price limits for Live Cattle and Feeder Cattle futures. Pending approval by the Commodity Futures Trading Commission, daily price limits for Feeder Cattle will increase to $5/cwt. from $4.50; expanded daily price limits will increase to $7.50, from the current $6.75. For Live Cattle, the daily limit will increase to $4/cwt. from $3; the expanded limit will become $6, compared to the current $4.50. Changes are scheduled to begin Oct. 5.
Friday to Friday Change
Weekly Auction Receipts
| Aug. 21 | Auction | Direct |
Video/net |
Total |
|
160,400 (+2,300) |
51,500 (-15,000) |
71,200 (+64,200) |
238,100 (+51,500) |
CME Feeder Index
| CME Feeder Index* | Aug. 20 | Change |
| $143.90 | + $1.65 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Aug. 21 | Change |
| 600-700 lbs. | $157.48 | – $3.13 |
| 700-800 lbs. | $150.87 | + $0.84 |
| 800-900 lbs. | $145.00 | + $0.92 |
South Central
| Steers-Cash | Aug. 21 | Change |
| 500-600 lbs. | $156.66 | – $0.72 |
| 600-700 lbs. | $151.70 | + $1.67 |
| 700-800 lbs. | $144.80 | + $1.40 |
Southeast
| Steers-Cash | Aug. 21 | Change |
| 400-500 lbs. | $151.62 | + $1.01 |
| 500-600 lbs. | $140.67 | + $0.59 |
| 600-700 lbs. | $134.60 | – $1.88 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Aug. 21 ($/cwt) | Change |
| Choice | $225.94 | + $11.70 |
| Select | $208.99 | + $9.70 |
| Ch-Se Spread | $16.95 | + $2.00 |
Futures
| Feeder Cattle | Aug. 21 | Change |
| Aug | $142.925 | – $1.000 |
| Sep | $144.850 | – $1.725 |
| Oct | $145.275 | – $2.150 |
| Nov | $145.500 | – $2.325 |
| Jan ’21 | $143.425 | – $1.800 |
| Mar | $142.250 | – $1.625 |
| Apr | $143.075 | – $1.100 |
| May | $143.200 | – $0.800 |
| Live Cattle | Aug. 21 | Change |
| Aug | $105.800 | – $1.800 |
| Oct | $108.550 | – $1.675 |
| Dec | $111.775 | – $1.050 |
| Feb ’21 | $114.625 | – $1.225 |
| Apr | $116.450 | – $1.350 |
| Jun | $109.825 | – $1.475 |
| Aug | $108.375 | – $1.525 |
| Oct | $110.550 | – $1.275 |
| Dec | $114.250 | – $0.550 |
| Corn | Aug. 21 | Change |
| Sep | $3.270 | + $0.026 |
| Dec | $3.404 | + $0.024 |
| Mar ’21 | $3.530 | + $0.038 |
| May | $3.604 | + $0.038 |
| Jly | $3.654 | + $0.030 |
| Sep | $3.672 | + $0.022 |
| Oil CME-WTI | Aug. 21 | Change |
| Oct | $42.34 | + $0.03 |
| Nov | $42.62 | – $0.05 |
| Dec | $42.93 | – $0.07 |
| Jan ’21 | $43.23 | – $0.07 |
| Feb | $43.51 | – $0.07 |
| Mar | $43.77 | – $0.07 |
Equities
| Equity Indexes | Aug. 21 | Change |
| Dow Industrial Average | 27930.33 | – 0.69 |
| NASDAQ | 11311.80 | + 292.50 |
| S&P 500 | 3397.16 | + 24.31 |
| Dollar (DXY) | 93.20 | + 0.10 |