Frigid, record-breaking temperatures, ice and snow across a wide swath of the nation slowed cattle movement and disrupted supply chains last week, especially in the Southern Plains.
With so many auctions closed last week, due to weather, and receipts reduced at others, it was tough to come up with much of a price trend. Based on the auctions monitored by Cattle Current, prices were mixed but generally steady to higher.
Optimism this week may be tempered as the nation thaws, with the potential for feedlots to slow marketing in efforts to recover some of the lost gain, and with more January placements than expected (see below).
Week to week on Friday, Feeder Cattle futures closed mixed, from an average of $1.45 lower in the front three contracts to an average of 57¢ higher.
The CME Feeder Cattle Index was $2.77 higher week to week on Thursday at $138.11, the highest since December.
“There is optimism for feeder cattle to gain momentum, but much of this optimism is pushed towards the summer and fall feeder cattle market,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Summer and fall Feeder Cattle contracts are trading at a clear $10 premium to spring contracts. Thus, the optimism is for five to six months in the future. Producers should keep an eye on the Feeder Cattle Index and deferred futures and price cattle accordingly.”
USDA’s Economic Research Service (ERS) lowered expectations for feeder steer prices, in the latest Livestock, Dairy and Poultry Outlook.
“Feeder steer prices for January 2021 averaged $133.94/cwt. for steers weighing 750-800 lbs. sold at Oklahoma City National Stockyards, about 7% below the average for January 2020. With prices for the first two weeks of February almost $7 below the same month last year, the first-quarter 2021 forecast was lowered $2 to $132/cwt.,” say ERS analysts. “Revisions to the 2020 calf crop tightened anticipated feeder cattle supplies in second-half 2021. However, higher expected feed costs offset expectations for stronger prices the rest of the year; as a result, the second-half 2021 feeder steer price forecasts are unchanged from last month.”
ERS forecasts the feeder steer price at $134/cwt. in the second quarter, $139 in the third and $140 in the fourth quarter for an annual average of $136.25. That would be only 80¢ more than the 2020 average.
Feedlot Placements Up
Traders may view the latest monthly Cattle on Feed report as somewhat bearish, with January placements of 2.017 million head. That was about 3% more year over year and about 3% more than pre-report expectations. The report accounts for feedlots with 1,000 head or more capacity.
“With higher placements in January, rising feed costs are likely to become more of a focus and concern,” say analysts with the Livestock Marketing Information Center, in the latest Livestock Monitor. “The weekly Omaha corn price for January averaged $5.04/bu., which is a 15.2% ($0.67 per bushel) rise over December 2020 and 32.0% ($1.23 per bushel) higher than last year. High feed costs may incentivize cow-calf operators to add more weight to calves before placing into feedlots. This may be a challenge as much of the western U.S. remains in drought, potentially limiting available pasture and feed supplies. The harsh winter weather in mid-February likely depleted hay stocks in some areas.”
Feedlot marketings in January of 1.822 million head were 5.6% less year over year and slightly fewer than expected.
Total cattle on feed Feb. 1 of 12.106 million head were 1.5% more than a year earlier and about 0.5% more than expectations. That’s the second most for the month since the data series began in 1996.
Fed Cattle Prices Mainly Steady
Negotiated cash fed cattle trade last week ended up steady in the Southern Plains at $114/cwt., according to the Agricultural Marketing Service. Live trades were steady to $1 higher in Nebraska at $114; dressed trade steady to $1 higher at $180-$181. In the western Corn Belt, prices were steady to $2 higher on a live basis at $114-$115 and steady to $2 higher in the beef at $180-$182.
Through Thursday, the five-area direct average steer price was $114.11/cwt. on a live basis, which was 33¢more than the previous week but $5.66 lower than the same week last year. The average five-area dressed steer price was 64¢ higher week to week at $180.71, which was $9.39 less year over year.
Week to week on Friday, Live Cattle futures closed mixed, from an average of $1.07 lower through the front five contracts to an average of 80¢ higher.
“The weather conditions many feedlot operators are navigating currently have a small impact on cattle soon to be marketed and a much larger impact on the rest of the animals,” Griffith explains. “The cold temperatures are sure to reduce average daily gain and increase feed intake. Thus, the higher cost of feed and fewer pounds to sell will negatively influence profitability. This does not mean those cattle will lose money, but profits will be smaller. Looking ahead, cattle feeders will be looking to gain some leverage from this situation moving into the spring to push prices north of $120.”
Wholesale Beef Prices Climb
Reduced slaughter last week, due to the weather, demonstrated once again the disparate forces of marginal demand: packer demand for fed cattle decreased, while retailers and food service competed harder for reduced beef production.
Choice boxed beef cutout value was $6.86 higher week to week on Friday at $239.23/cwt. Select was $6.97 higher at $227.90.
Estimated cattle slaughter for the week of 552,000 head was 56,000 head fewer than the previous week and 74,000 head fewer than the same week last year. Estimated year-to-date cattle slaughter of 4.50 million head is 263,000 head fewer (-5.52%) than last year. Estimated year-to-date beef production of 3.81 billion lbs. is 124.8 million lbs. less (-3.17%) than the same time last year.
Friday to Friday Change
Weekly Auction Receipts
CME Feeder Index
Thursday through Thursday…
|CME Feeder Index*||Feb. 18||Change|
*Wednesday-to Wednesday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$151.50||+ $0.46|
|700-800 lbs.||$140.64||– $0.50|
|800-900 lbs.||$134.59||+ $0.965|
|500-600 lbs.||$155.23||– $4.37|
|600-700 lbs.||$140.98||– $3.69|
|700-800 lbs.||$134.01||– $1.17|
|400-500 lbs.||$154.99||– $5,42|
|500-600 lbs.||$141.66||– $3.05|
|600-700 lbs.||$132.20||+ $0.07|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Feb. 19 ($/cwt)||Change|
|Ch-Se Spread||$11.33||– $0.11|
|Feeder Cattle||Feb. 19||Change|
|Jan ’22||$153.800||+ $1.100|
|Live Cattle||Feb. 19||Change|
|Feb ’22||$126.575||+ $1.000|
|Mar ’21||$5.426||+ $0.040|
|Mar ’22||$4.676||+ $0.122|
|Oil CME-WTI||Feb. 19||Change|
|Equity Indexes||Feb. 19||Change|
|Dow Industrial Average||31494.32||+ 35.92|
|S&P 500||3906.71||– 28.12|
|Dollar (DXY)||90.34||– 0.14|