Despite plenty of pressure and uncertainty in futures and equity markets, cash calf and feeder cattle prices surged higher last week. In fact, regional feeder steer prices in all regions were higher year-over-year for the first time in a long spell, according to the National Weekly Feeder and Stocker Cattle Summary from AMS.
Nationwide, steers and heifers sold $2-$6/cwt. higher, with some auctions from the Northern Plains to the Southern Plains quoting double digit gains, according to the Agricultural Marketing Service (AMS).
“Newfound optimism and warmer weather brought out buyers ready to take on grazing calves,” AMS analysts explain. “Many auction reports made note of the condition of cattle and alluded that buyers were hoping for compensatory gain as soon as the cattle got off the truck.”
“The hope and expectation that 500-550 lbs. steers could reach as high as $160/cwt. this spring is back in play,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Concern was beginning to creep in as the market struggled through the end of January and the first couple of weeks in February, but optimism is back on the table…the thought is that calf prices will continue to escalate for at least three to five weeks before softening.”
Early-week optimism was tied to the rebound in Cattle futures. By the last two trading sessions, though, Cattle futures moved lower, pressured in part by resurgent fears about the impact of novel coronavirus on the global economy, as well as recognition that positive feeding weather is boosting beef production.
Except for $1.67 higher and 72¢higher in the front two contracts, Feeder Cattle futures closed an average of 69¢lower week to week on Friday.
In the meantime, Griffith points out the cull cow market is gaining some steam.
“Breaker-grade cattle exceeded $62/cwt. on average this week with higher dressing cattle exceeding the $70 price mark,” Griffith explains. “The price of slaughter cows is also expected to continue increasing, but the current market may offer some producers an opportunity to offload animals that are consuming valuable feed resources. Fall calving producers should consider pregnancy evaluation this spring and market open animals on what is likely to result in a strong salvage value.”
Fed Cattle Prices Mostly Steady
Negotiated cash fed cattle trade ended the week steady to $1 higher on a live basis at $120/cwt. in the Southern Plains and $119-$120 in the north. Dressed trade was steady at $190.
Live Cattle futures closed an average of $1.49 lower through the front four contracts week to week on Friday. They were an average of 63¢lower across the rest of the board.
Near term, increased slaughter numbers and heavier carcass weights year over year, magnified by the mostly open winter so far are keeping a firmer seasonal lid on wholesale beef prices.
Choice boxed beef cutout value was $3.00 lower week to week on Friday at $205.09/cwt. Select was $4.01 lower at $201.70.
The average steer dressed weight in January was 904 lbs., according to USDA’s monthly Livestock Slaughter report. That was 18 lbs. more than the same month a year earlier. The average dressed heifer weight of 833 lbs. was 9 lbs. more than a year earlier.
Commercial beef production in January was 2.39 billion lbs., which was 78.7 million lbs. more (+3.41%) than the same time a year earlier. Total commercial red meat production for the month was 257.7 million lbs. more (+5.48%) at 4.96 billion lbs.
“There is no doubt that beef demand has been strong since the drought in 2012 and 2013. However, many cattle producers are probably asking why they are not benefiting more from strong demand in the form of higher cattle prices,” Griffith says. “The answer to that lies on the supply side of the equation. Producers responded to high cattle prices by increasing beef supply. Beef production in 2019 was nearly 3.5 billion pounds greater (+14.6%) than in 2015 when the demand index hit 112. Thus, cattle prices are lower.”
Fewer Feedlot Placements than Expected
Feedlots placed fewer cattle in January year over year, according to the monthly USDA Cattle on Feed report released Friday. The report is for feedlots with 1,000 head or more capacity.
Cattle feeders placed 1.96 million head in January, which was 0.61% less (-12,000 head) than the previous year. Ahead of the report, estimates were for placements to be up about 2%.
Marketings in January of 1.93 million head were 1.10% more (+21,000 head) than a year earlier.
Cattle on feed Feb. 1 of 11.93 million head were 2.16% (+252,000 head) more than a year earlier.
Both marketings and the on-feed inventory were close to pre-report estimates.
Friday to Friday Change
Weekly Auction Receipts
| Feb. 21 | Auction | Direct |
Video/net |
Total |
|
240,100 (+48,300) |
36,100 (+6,100) |
38,900 (+33,900) |
315,100 (+88,300) |
CME Feeder Index
| CME Feeder Index* | Feb. 20 | Change |
| $142.08 | + $1.48 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Feb. 21 | Change |
| 600-700 lbs. | $161.67 | + $3.52 |
| 700-800 lbs. | $149.33 | + $5.11 |
| 800-900 lbs. | $139.29 | + $2.74 |
South Central
| Steers-Cash | Feb. 21 | Change |
| 500-600 lbs. | $173.14 | + $5.62 |
| 600-700 lbs. | $154.06 | + $3.71 |
| 700-800 lbs. | $141.42 | + $1.49 |
Southeast
| Steers-Cash | Feb. 21 | Change |
| 400-500 lbs. | $166.56 | + $5.82 |
| 500-600 lbs. | $152.89 | + $5.20 |
| 600-700 lbs. | $139.59 | + $4.44 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Feb. 21 ($/cwt) | Change |
| Choice | $205.09 | – $3.00 |
| Select | $201.70 | – $4.01 |
| Ch-Se Spread | $3.39 | + $1.01 |
Futures
| Feeder Cattle | Feb. 21 | Change |
| Mar | $140.200 | + $1.675 |
| Apr | $142.100 | + $0.725 |
| May | $142.850 | – $0.350 |
| Aug | $149.675 | – $0.525 |
| Sep | $151.000 | – $0.500 |
| Oct | $151.800 | – $0.550 |
| Nov | $151.800 | – $0.750 |
| Jan ’21 | $147.850 | – $1.475 |
| Live Cattle | Feb. 21 | Change |
| Feb ’20 | $119.725 | – $1.100 |
| Apr | $118.250 | – $2.075 |
| Jun | $110.275 | – $1.725 |
| Aug | $109.400 | – $1.075 |
| Oct | $113.275 | – $0.375 |
| Dec | $117.525 | – $0.575 |
| Feb ’21 | $120.000 | – $0.750 |
| Apr | $121.275 | – $0.900 |
| Jun | $114.500 | – $0.550 |
| Corn | Feb. 21 | Change |
| Mar ’20 | $3.770 | – $0.006 |
| May | $3.806 | – $0.014 |
| Jul | $3.834 | – $0.020 |
| Sep | $3.820 | – $0.022 |
| Dec | $3.860 | – $0.026 |
| Mar ’21 | $3.952 | – $0.028 |
| Oil CME-WTI | Feb. 21 | Change |
| Apr | $53.38 | + $1.06 |
| May | $53.50 | + $0.90 |
| Jun | $53.54 | + $0.75 |
| Jly | $53.50 | + $0.63 |
| Aug | $53.37 | + $0.52 |
| Sep | $53.20 | + $0.43 |
Equities
| Equity Indexes | Feb. 21 | Change |
| Dow Industrial Average | 28992.41 | – 405.67 |
| NASDAQ | 9576.59 | – 154.59 |
| S&P 500 | 3337.75 | – 42.41 |
| Dollar (DXY) | 99.34 | + 0.18 |