Seasonal trends and weaker cash fed cattle trade pressured calf and feeder cattle prices last week. Steers and heifers sold steady to $3/cwt. lower, according to the Agricultural Marketing Service (AMS).
“Drought conditions, culminating in low water levels and poor hay production, are motivating producers to sell cattle,” say AMS analysts. “Not only are feeders making their way to town, but mature cattle as well…Missouri is the epicenter of drought in the Midwest; some parts have been dry for the last year or longer. As of the latest report near 98% of the state is showing on the drought monitor. Ratings continue to worsen each week and there is now 5.5% designated in the exceptional (D4) category; approximately 30% of cattle inventory (state) is within an area that is experiencing drought.”
Auction receipts for the week were 7.7% more than the 5-year average, likely due at least in part to sales forced by drought.
In the Panhandles of Oklahoma and Texas, though, AMS analysts say recent rains have producers gearing up to plant winter wheat, hoping stocking rates this fall can be more typical than last year when drought derailed plans.
Week to week on Friday, Feeder Cattle futures closed an average of $1.48 higher (80¢ to $2.37 higher).
“There will be weeks moving through the fall marketing period where week-over-week prices are higher, but producers should be cognizant of the seasonal decline that looms over the market,”says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The one group of producers that may find good news in this outlook is stocker and backgrounding operations. Lower overall investment costs reduce financial risks, while margins generally stay about the same. The market does appear to be favorable toward margin operators this fall and through the winter with favorable value of gains on the table.”
Negotiated cash fed cattle sales were at $109.00-$110.50/cwt. in Nebraska through Friday afternoon. That was steady to $2 less than previous week. Dressed trade was at mostly $173, which was $2 less than the prior week. Elsewhere, trade remained undeveloped for the week, based on USDA reports.
“Packers still need to buy fed cattle, but it appears that inventory is plentiful enough that competition for fed cattle is lacking,” AMS analysts say. “Fed cattle supplies through August and September should remain plentiful. At this time there seems to be limited positive news to encourage CME cattle futures and move the fed cattle market higher.”
With that said, after pressure early in the week—not to mention extremely light trade and declining open interest—Cattle futures gained some ground week to week. Stronger late-week action was supported by stronger wholesale beef values reports and renewed hopes that the U.S. and China plan to renew trade talks.
Choice boxed beef cutout value was $4.77 higher week to week on Friday at $211.38/cwt. Select was $3.15 higher at $200.92.
Live Cattle futures closed an average of $1.21 higher week to week on Friday.
“Weekly finished cattle prices have been below weekly 2017 price levels for 22 consecutive weeks with an average difference of $11.46/cwt. during that time period,” Griffith says. “This week may or may not result in the 23rd consecutive week of year-over-year declines. However, the streak is likely to end before the end of August if cattle feeders can keep prices over $107 next week or $105 the following week. The finished cattle market has been amazingly flat since the beginning of July as cattle feeders did not succumb to leverage generally held by packers, but the last two weeks of trading suggest that cattle feeders need to move cattle. Finished cattle prices continue to have downside price risk pressure, but cattle feeders will attempt to hold their ground.”
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts Aug. 17 |
Auction (head) (Change) |
Direct (head) (Change) |
Video/net (head) (Change) |
Total (head) (Change) |
|
157,200 (-1,000) |
53,700 (-19,300) |
7,100 (-224,600) |
210,300 (-252,600) |
CME Feeder Index
| CME Feeder Index | Aug. 16 | Change |
| $149.59 | – $1.53 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Aug. 17 | Change |
| 600-700 lbs. | $172.12 | + $4.14 |
| 700-800 lbs. | $159.58 | + $1.87 |
| 800-900 lbs. | $153.64 | + $2.47 |
South Central
| Steers-Cash | Aug. 17 | Change |
| 500-600 lbs. | $163.04 | + $0.14 |
| 600-700 lbs. | $157.92 | – $0.67 |
| 700-800 lbs. | $151.09 | + $0.27 |
Southeast
| Steers-Cash | Aug. 17 | Change |
| 400-500 lbs. | $161.46 | + $2.71 |
| 500-600 lbs. | $149.42 | – $3.09 |
| 600-700 lbs. | $142.40 | – $1.37 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Aug. 17 ($/cwt) | Change |
| Choice | $211.38 | + $4.77 |
| Select | $200.92 | + $3.15 |
| Ch-Se Spread | $10.46 | + $1.62 |
Futures
| Feeder Cattle | Aug. 17 | Change |
| Aug | $150.950 | + $1.050 |
| Sep | $151.825 | + $2.300 |
| Oct | $151.850 | + $2.375 |
| Nov | $151.650 | + $1.725 |
| Jan ’19 | $150.000 | + $1.350 |
| Mar | $149.150 | + $1.325 |
| Apr | $149.850 | + $0.800 |
| May | $149.900 | + $0.900 |
| Live Cattle | Aug. 17 | Change |
| Aug | $109.425 | + $1.175 |
| Oct | $110.875 | + $1.625 |
| Dec | $114.625 | + $1.525 |
| Feb ’19 | $118.025 | + $1.650 |
| Apr | $118.875 | + $1.000 |
| Jun | $112.850 | + $1.000 |
| Aug | $111.900 | + $1.125 |
| Oct | $113.450 | + $1.150 |
| Dec | $114.500 | + $0.625 |
| Corn futures | Aug. 17 | Change |
| Sep | $3.642 | + $0.066 |
| Dec | $3.786 | + $0.070 |
| Mar ’19 | $3.906 | + $0.074 |
| May | $3.976 | + $0.074 |
| Jul | $4.034 | + $0.074 |
| Sep | $4.016 | + $0.044 |
| Oil CME-WTI | Aug. 17 | Change |
| Sep | $65.91 | – $1.72 |
| Oct | $65.21 | – $1.73 |
| Nov | $64.94 | – $1.60 |
| Dec | $64.66 | – $1.55 |
| Jan | $64.43 | – $1.54 |
| Feb | $64.15 | – $1.49 |
Equities
| Equity Indexes | Aug. 17 | Change |
| Dow Industrial Average | 25669.32 | + 356.18 |
| NASDAQ | 7816.33 | – 22.78 |
| S&P 500 | 2850.13 | + 16.85 |
| Dollar (DXY) | 96.21 | – 0.05 |