More feedlot placements in July than expected and expectations for wholesale beef values to decline seasonally set the stage for lower Cattle futures last week, pressuring cash fed cattle prices, as well as calves and feeders.
Nationwide, steers and heifers sold steady to $4/cwt. lower, according to the Agricultural Marketing Service (AMS).
Feeder Cattle futures closed an average of $4.34 lower week to week on Friday ($3.07 lower at the back to $5.10 lower toward the front).
“The feeder cattle market has been on a tear since the second week of April, when the market lows were set during the peak of the coronavirus pandemic,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Since April, the fall feeder cattle futures contracts have increased about $30/cwt. to their recent highs. However, the market has taken a little breather the past couple of weeks as Feeder Cattle futures prices lost approximately $6. This price movement provides some semblance of normalcy as it relates to supply and demand of feeder cattle. It would appear the market is attempting to find the longer-term supply and demand of feeder cattle compared to the short-run shocks that seem to have become so common the past year.”
Given seasonal pressure and what appear to be ample calves and feeder cattle, Griffith says it will be difficult for prices to climb beyond their recent peak for the remainder of the year.
The outlook for grain prices also applied pressure to calves and feeder cattle.
“Grain markets found support with dry weather providing the majority of the strength to the market,” AMS analysts explain. “Soybean markets were especially strong with traders growing concerned about the dry conditions across Nebraska, Iowa, and parts of Illinois. December corn retraced up to the highest prices seen in a month and a half.”
Week to week on Friday, Corn futures closed an average of 15¢ higher through the front six contracts. Soybean futures closed an average of 43¢ higher through the front six contracts.
Fed Cattle Prices Soften
Negotiated cash fed cattle prices ended the week $1 lower in the Southern Plains at $105/cwt. on a live basis, $1.50 lower in Nebraska at $105 and $2 lower in the western Corn Belt at $104-$107. Dressed trade was $2-$3 lower at mostly $167.
Through Thursday, the five-area direct weighted average steer price was $105.12/cwt. on a live basis, which was $1.50 lower than the previous week. The weighted average dressed steer price of $166.52 was $2.59 less.
Live Cattle futures closed an average of $2.38 lower week to week on Friday ($1.35 lower at the back to $3.65 lower toward the front).
“Prices in the fed cattle market will be under pressure during September and October before demand for beef begins to pick back up leading into end of the year holidays,” Griffith says. “…the market will be steady to soft compared to simply declining in late summer and moving into the fall months. The market is not expected to go back below $100 and should be well supported at $102-$103.”
On the up side, Derrell Peel, Extension livestock marketing specialist at Oklahoma state University notes data and anecdotal indications suggest the backlog of fed cattle is rapidly diminishing and may be nearly erased.
“Going forward, the 1 million head decrease in feedlot placements in February, March and April suggests that front-end feedlot supplies will be relatively tight at least through September,” Peel explained, in his early-week market comments.
Wholesale Values Plateau
Wholesale beef values appeared to reach their pre-Labor Day zenith, with support from post-holiday re-stocking.
Choice boxed beef cutout value was $3.46 higher week to week on Friday at $229.40/cwt. Select was $5.87 higher at $214.86.
Estimated total cattle slaughter for the week ending Aug. 29 of 654,000 head was 2,000 more than the previous week’s estimate and 1,000 head more than the same time a year earlier. Year-to-date cattle slaughter is estimated at 20.99 million head, which would be 1.06 million fewer (-4.80%) than the same time last year. Estimated beef production so far this year is 17.36 billion lbs., which is 381.2 million lbs. less (-2.1%) than last year.
Friday to Friday Change
Weekly Auction Receipts
| Aug. 28 | Auction | Direct |
Video/net |
Total |
|
156,200 (+4,200) |
38,700 (-119,300) |
280,300 (+192,900) |
475,200 (+69,300) |
CME Feeder Index
| CME Feeder Index* | Aug. 27 | Change |
| $141.56 | – $2.34 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Aug. 28 | Change |
| 600-700 lbs. | $158.56 | + $1.08 |
| 700-800 lbs. | $146.99 | – $3.88 |
| 800-900 lbs. | $142.80 | – $2.20 |
South Central
| Steers-Cash | Aug. 28 | Change |
| 500-600 lbs. | $153.80 | – $2.86 |
| 600-700 lbs. | $152.06 | + $0.36 |
| 700-800 lbs. | $140.48 | – $4.32 |
Southeast
| Steers-Cash | Aug. 28 | Change |
| 400-500 lbs. | $150.23 | – $1.39 |
| 500-600 lbs. | $141.77 | + $1.10 |
| 600-700 lbs. | $134.10 | – $0.50 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Aug. 28 ($/cwt) | Change |
| Choice | $229.40 | + $3.46 |
| Select | $214.86 | + $5.87 |
| Ch-Se Spread | $14.54 | – $2.41 |
Futures
| Feeder Cattle | Aug. 28 | Change |
| Sep | $140.025 | – $4.825 |
| Oct | $140.175 | – $5.100 |
| Nov | $140.600 | – $4.900 |
| Jan ’21 | $138.650 | – $4.775 |
| Mar | $138.225 | – $4.025 |
| Apr | $139.375 | – $3.700 |
| May | $140.125 | – $3.075 |
| Aug | $141.600 | n/a |
| Live Cattle | Aug. 28 | Change |
| Aug | $103.225 | – $2.575 |
| Oct | $104.900 | – $3.650 |
| Dec | $108.500 | – $3.275 |
| Feb ’21 | $111.850 | – $2.775 |
| Apr | $114.100 | – $2.350 |
| Jun | $107.750 | – $2.075 |
| Aug | $106.525 | – $1.850 |
| Oct | $109.000 | – $1.550 |
| Dec | $112.900 | – $0.350 |
| Corn | Aug. 28 | Change |
| Sep | $3.460 | + $0.190 |
| Dec | $3.592 | + $0.188 |
| Mar ’21 | $3.692 | + $0.162 |
| May | $3.756 | + $0.152 |
| Jly | $3.794 | + $0.140 |
| Sep | $3.770 | + $0.098 |
| Oil CME-WTI | Aug. 28 | Change |
| Oct | $42.97 | + $0.63 |
| Nov | $43.29 | + $0.67 |
| Dec | $43.62 | + $0.69 |
| Jan ’21 | $43.94 | + $0.71 |
| Feb | $44.24 | + $0.73 |
| Mar | $44.51 | + $0.74 |
Equities
| Equity Indexes | Aug. 28 | Change |
| Dow Industrial Average | 28653.87 | + 723.54 |
| NASDAQ | 11695.63 | + 383.83 |
| S&P 500 | 3508.01 | + 110.85 |
| Dollar (DXY) | 92.30 | – 0.90 |