Weather and heavy post-holiday volume—the most receipts since July of last year—pressured calf and feeder cattle prices last week. Steers and heifers sold from $4/cwt. lower to $1 higher, according to the Agricultural Marketing Service (AMS).
“Heavy rain and snow has most of the trade area in very muddy conditions and these conditions are discouraging calf buyers from buying at this time,” according to the AMS reporter on hand for Monday’s auction at Oklahoma National Stockyards.
“Weather scares started mid-week when Winter Storm Gia was named and projected to move through the heart of the country later in the week and into the weekend,” explained AMS analysts. “Feedyards that were already wet will see more moisture fall from the sky, dashing any hopes that they will dry out anytime soon…Muddy feedyards in Kansas, Nebraska and Iowa want to get cattle moved out of the poor pen conditions, as cattle performance has been seriously impeded due to above average moisture recently.”
Weather impacts provided support to Cattle futures, though.
Feeder Cattle futures closed an average of $1.60 higher week to week on Friday (90¢ to $2.10 higher).
Week to week on Friday, Live Cattle futures closed an average of $1.70 higher (92¢ higher to $3.05 higher in spot Feb).
Peering a little further ahead, in his weekly market comments, Andrew P. Griffith, agricultural economist at the University of Tennessee says, “Calf prices should slowly and steadily increase through March and into early April. The expectation is for 500-lb. steer prices to peak near $160/cwt. per with a first-quarter average price of $155. The $160 price is a couple of dollars lower than the 2018 apex, but the calf and feeder cattle markets may be under pressure the next three to four months as industry participants attempt to figure out the fed cattle marketing schedule. The feeder cattle market may end up receiving a more direct blow than the calf market in the near term as calf buyers continue to bet on the come. However, the calf market will not be immune to the pressure.”
Cattle feeder and packers continued their standoff through late Friday afternoon, with negotiated cash fed cattle trade undeveloped, according to USDA reports. However, according to AMS there were a few dressed sales in the Northern Plains at $197/cwt., which was $2 more than the previous week.
Cattle feeding margins are well into the black in early January and cattle feeders are setting asking prices at levels that will only improve margins,” Griffith says.
“Cattle feeders are not in any mood to bid up feeder cattle due to the severe discounts in deferred live cattle futures. The feeder and fed cattle spread is certainly the dichotomy present in today’s market. The feeder-fed cattle spread is not at a record level by any stretch of the imagination, but it has narrowed tremendously since the end of October. Part of this narrowing is due to supply and demand fundamentals while the other part is likely due to expectations. If profits continue in the feedlot then some of those dollars will eventually be passed down.”
On the other side of the trade, though packer returns remain positive, according to various sources, margins are narrowing with seasonally lower wholesale beef values and seasonally higher fed cattle prices.
Week to week on Friday, Choice boxed beef cutout value was $2.05 lower at $212.46/cwt. Select was $1.39 lower at $206.27.
“Packer margins have no doubt shrunk in the last few months, and carcass weights coupled with lower yields will have an impact moving forward with product tonnage being available in the marketplace,” say AMS analysts.
Scant Data Adds Uncertainty
With the partial government shutdown dragging into the fourth week, the lack of publicly available market data is becoming more apparent.
“Actual slaughter data has been among the most missed weekly market data. That data is compiled by the National Agricultural Statistics Service (NASS) but is released by the Agricultural Marketing Service. It provides valuable information on weights, production, and the number of head slaughtered,” explain analysts with the Livestock Marketing Information Center (LMIC), in the most recent Livestock Monitor.
There was no monthly World Agricultural Supply and Demand Estimates on Friday, as originally scheduled. Next week’s monthly Livestock, Dairy and Poultry Outlook is also in doubt.
“The next couple of weeks hold several vital reports that could affect the tone of the entire year,” say LMIC analysts. “For example, the annual Cattle Inventory is scheduled to be published at the end of this month. That report provides one of only two point estimates in the size of the beef herd, and the number of replacement animals producers are holding. The monthly Cattle on Feed report (due Jan. 25) also is at risk. Without that type of information, cattle markets will be flying blind.”
Friday to Friday Change*
Weekly Auction Receipts
*Compared to two weeks earlier
CME Feeder Index
|CME Feeder Index*||Jan. 10||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$160.70||+ $0.35|
|700-800 lbs.||$150.00||+ $0.96|
|800-900 lbs.||$143.61||+ $0.32|
|500-600 lbs.||$162.80||+ $0.05|
|600-700 lbs.||$149.32||– $4.25|
|700-800 lbs.||$143.73||– $3.20|
|400-500 lbs.||$158.34||+ $0.75|
|500-600 lbs.||$148.51||– $2.08|
|600-700 lbs.||$139.98||+ $0.29|
*Compared to two weeks earlier
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Jan. 11 ($/cwt)||Change|
|Ch-Se Spread||$6.19||– $0.66|
|Feeder Cattle||Jan. 11||Change|
|Jan ’19||$146.125||+ $1.225|
|Live Cattle||Jan. 11||Change|
|Feb ’19||$124.975||+ $3.050|
|Feb ’20||$119.250||+ $1.600|
|Corn futures||Jan. 11||Change|
|Mar ’19||$3.782||– $0.048|
|Mar ’20||$4.106||– $0.026|
|Oil CME-WTI||Jan. 11||Change|
|Equity Indexes||Jan. 11||Change|
|Dow Industrial Average||23995.95||+ 562.79|
|S&P 500||2596.26||+ 64.32|
|Dollar (DXY)||95.67||– 0.53|