Cattle markets gained ground last week, amid the first week of full trade since the holidays, helped along by stronger Cattle futures, supported by expected seasonally snugger harvest-ready cattle supplies.
“Grazing steers and heifers sold sharply higher than the previous week’s light receipts, while feeder steers and heifers sold $1/cwt. lower to $3 higher,” according to the Agricultural Marketing Service (AMS). “Load lots of long-time weaned calves were in the offering as producers were ready to get their calves marketed. Several loads of lightweight calves could be procured, from the Southern Plains to the Northern Plains.”
Feeder Cattle futures closed an average of $3.95 higher week to week on Friday.
“Calf and feeder cattle markets responded as expected with strong gains to start the year and the trend should continue moving through the next few months,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “…The greater optimism is the expectation that the summer and all months of 2020 should be stronger than those of 2019.”
Cash Fed Cattle Prices Likely Steady to Higher
Through Friday afternoon, based on USDA reports, cash fed cattle trade was yet to be fully established, but early indications were for another week of steady to higher prices.
For instance, although too few to trend, early dressed sales in Nebraska and the western Corn Belt were at $200/cwt., which was mainly steady to $2 higher than the previous week.
“Packers have watched their margins tighten the past few weeks as boxed beef prices declined and finished cattle prices escalated,” Griffith explains. “…Everyone prefers more to less when it comes to margins and packers are attempting to draw cattle prices lower to support their margins. They may have a little success in the short-run but time is not on their side, as grilling season will fast approach.”
Except for $1.65 lower in the back contact, Live Cattle futures closed an average of $1.89 higher.
Wholesale beef values finally began to turn slowly away from an apparent seasonal ebb. Choice boxed beef cutout value was $1.55 higher week to week on Friday at $210.04/cwt. Select was $1.16 higher at $206.55.
“The beef supply situation is expected to be more supportive this year, with cyclical herd expansion over and beef production peaking,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The current status of the cattle cycle will be confirmed in the Cattle inventory report to be released at the end of January. In general, cattle numbers are expected to be down slightly year over year. Beef production is expected to peak fractionally higher in 2020, with heavier carcass weights offsetting a slight decline in cattle slaughter. Carcass weights finished 2019 above year-earlier levels and will bear watching in the coming year.”
The latest monthly World Agricultural Supply and Demand Estimates (WASDE forecast 2020 beef production at 27.44 billion lbs., which would be 289 million lbs. more (+1.06%) than in 2019.
WASDE anticipates average cash fed steer prices (five-area direct) for 2020 to be $125/cwt. in the first quarter, $118 in the second, $112 in the third and $114 in the fourth. The annual average price for 2020 is projected at $117.50, which is 50¢ more than the previous month’s estimate and 72¢ more than the estimated average in 2019.
Friday to Friday Change
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||Jan. 9||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$158.74||+ $4.08|
|700-800 lbs.||$150.86||+ $3.12|
|800-900 lbs.||$144.60||– $0.14|
|500-600 lbs.||$162.92||+ $1.51|
|600-700 lbs.||$150.05||– $1.92|
|700-800 lbs.||$145.69||– $3.99|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Jan. 10 ($/cwt)||Change|
|Ch-Se Spread||$3.49||+ $0.39|
|Feeder Cattle||Jan. 10||Change|
|Jan ’20||$147.600||+ $4.250|
|Live Cattle||Jan. 10||Change|
|Feb ’20||$127.425||+ $2.700|
|Feb ’21||$123.825||+ $1.700|
|Mar ’20||$3.856||– $0.008|
|Mar ’21||$4.124||+ $0.014|
|Oil CME-WTI||Jan. 10||Change|
|Equity Indexes||Jan. 10||Change|
|Dow Industrial Average||28823.87||+ 188.99|
|S&P 500||3265.35||+ 30.50|
|Dollar (DXY)||97.35||+ 0.45|