Judging by auction reports throughout the week, calves and feeder cattle prices were pressured significantly, overall, by surging grain prices, weaker cash fed cattle prices and volatile Cattle futures. Dangerously high winds in the Dakotas also weighed on receipts and demand at some sales in that region.
Steers and heifers sold $2-$4/cwt. lower in the North Central and South Central regions last week, according to the Agricultural Marketing Service (AMS), in it’s weekly summary on Tuesday. In the Southeast, though, calves suitable for grazing traded $2-$4 higher.
“Demand was reported as good to even very good in some auctions, but at lower price levels than the previous week in the Plains,” say AMS analysts. “The most talked about factor was the increase of grain prices and how it will affect the feeder and slaughter cattle markets moving forward.” They note feeder cattle auction prices are $10-$15 less than a year earlier.
Week to week on Friday, Feeder Cattle futures closed an average of 72¢ lower through the front five contracts (20¢ to $1.25 lower) and then an average of $1.26 higher. That was with a bounce of an average of $2.02 higher on Friday.
“Since Christmas, January Feeder Cattle futures prices declined $8/cwt. Similarly, March Feeder Cattle futures contract prices are approximately $9 lower, while the August contract has only lost $5 over the same time period,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.
Soybeans and Corn Climb Higher
Plenty of the aforementioned price pressure stems from the extraordinary and relentless increase in grain prices.
Week to week on Friday, Corn futures closed an average of 30¢ higher through the front six contracts.
“Corn futures prices increased more than $1/bu. since the middle of December,” Griffith says. “If it is assumed that an animal will consume 50 bu. of corn while in the feedlot, then the $1 increase in price means it will cost $50 more in feed costs. That increase would essentially mean that a cattle feeder has to pay $6/cwt. less for an 800-pound steer, if everything else remains the same.”
That’s before considering corn basis, which appears to be strengthening, Griffith explains.
“The Corn futures rally is following soybeans higher, and cash has struggled to keep pace, widening the basis for this time of year. Although exports have been strong, the fundamentals are not currently holding ending stocks tight enough to justify $5 corn,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “Still, there seems little to move the futures lower ahead of U.S. plantings and harvest in South America.”
USDA increased the forecast season-average corn price received by producers to $4.20/bu., in the latest monthly World Agricultural Supply and Demand Estimates. That was 20¢more than the previous month, based on lower production and ending stocks.
Week to week on Friday, Soybean futures closed an average of 41¢ higher through the front six contracts. That’s right at an average of $1 higher for those contracts over the last two weeks.
USDA forecast the U.S. season-average soybean price for 2020-21 60¢ higher at $11.15/bu. The soybean meal price was projected $20 higher at $390/short ton. The soybean oil price was forecast 2.5¢ higher at 38.5¢/lb. As with corn, lower estimated production and ending stocks contributed to the increase.
“The impetus for surging prices (soybeans) has come from adverse crop development conditions in Argentina, the third largest soybean producing country and the leading exporter of soybean meal in the world,” LMIC analysts explain. “Reduced availability of soybeans and soybean products from Argentina is forcing the world to focus on U.S. soybean supplies. Projected exports of U.S. soybeans is expected to be a record at 2.2 billion bu. and soybean meal exports should be close to the record set last year at 14 million tons. As a result, inventories of soybeans at the end of this crop year (Aug. 31, 2021) will be close to 200-220 million bu., down from 909 million bu. two years earlier.
“Tightening supplies support a rising price trend in order to bid more plantings of the crop in the U.S. this spring versus corn and cotton. The average price for soybeans this crop year is currently expected to be $11.50 but the risks to this forecast are all to the high side, depending on weather and the global economy in coming months. The potential for record high soybean prices in the $15-$20 area exists, based on possible market conditions.”
Fed Cattle Prices Soften
Despite the nascent and slow rebound in wholesale beef values, negotiated cash fed cattle prices struggled last week: generally $1-$3 lower at $108-$111/cwt., according to the Agricultural Marketing Service. Dressed prices were $1-$4 lower at $172-$174.
More specifically, live prices last week were at $112/cwt. in the Southern Plains and Colorado, $110-$111 in Nebraska and $110 in the western Corn Belt. Dressed trade was at $172 in Nebraska and at $173-$174 in the western Corn Belt.
Through Thursday, the average five-area direct fed steer price was $109.52/cwt. on a live basis, which was $1.96 less than the previous week and $14.48 less than the same week a year earlier. The average steer price in the beef was $173.06, which was $2.96 less than the previous week and $26.01 less than a year earlier.
Week to week on Friday, except for an average of $1.40 lower in the front two contracts, Live Cattle futures closed an average of $2.33 higher.
Choice boxed beef cutout value was $6.12 higher at $212.92/cwt. week to week on Friday. Select was $6.36 higher at $203.08.
Griffith notes the rib and loin primal are driving the stronger beef market with both more than $11/cwt. higher week to week.
“The chuck and short plate are also providing some support for the higher price as the chuck is nearly $7 higher than last week and short plate values have increased more than $5,” Griffith says.
Looking further ahead, USDA lowered its 2021 forecast for total red meat and poultry production, compared to the previous month’s estimate, in the latest WASDE.
Even so, total estimated red meat and poultry production for 2021 is forecast 634 million lbs. more than in 2020 (+0.60%) at 107.10 billion lbs.
Beef production for 2021 is forecast at 27.19 billion lbs., which would be 32 million lbs. more (+0.11%) than in 2020, with higher non-fed cattle slaughter more than offsetting lighter expected cattle carcass weights.
WASDE estimated the average five-area direct fed steer price for last year at $108.51/cwt. Fed steer prices for 2021 are projected to be $113 in the first and second quarters, $115 in the third quarter and $120 in the fourth quarter for an annual average of $115.50, which was 50¢ more than the previous month’s forecast.
Friday to Friday Change
Weekly Auction Receipts
| Jan. 18 | Auction | Direct |
Video/net |
Total |
|
313,400 (-35,400) |
63,800 (+23,500) |
157,300 (+70,000) |
534,500 (+57,100) |
CME Feeder Index
Thursday through Thursday…
| CME Feeder Index* | Jan. 15 | Change |
| $135.45 | – 0.18 |
*Wednesday-to Wednesday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Jan. 18 | Change |
| 600-700 lbs. | $148.71 | – $2.83 |
| 700-800 lbs. | $137.21 | – $3.79 |
| 800-900 lbs. | $130.74 | – $4.04 |
South Central
| Steers-Cash | Jan. 18 | Change |
| 500-600 lbs. | $156.96 | – $0.36 |
| 600-700 lbs. | $140.22 | – $2.09 |
| 700-800 lbs. | $131.89 | – $2.66 |
Southeast
| Steers-Cash | Jan. 18 | Change |
| 400-500 lbs. | $154.88 | + $2.93 |
| 500-600 lbs. | $139.47 | – $3.19 |
| 600-700 lbs. | $129.74 | – $2.17 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Jan. 15 ($/cwt) | Change |
| Choice | $212.92 | + $6.12 |
| Select | $203.08 | + $6.36 |
| Ch-Se Spread | $9.84 | – $0.27 |
Futures
| Feeder Cattle | Jan. 15 | Change |
| Jan | $134.575 | – $1.250 |
| Mar | $135.825 | – $1.000 |
| Apr | $138.300 | – $0.775 |
| May | $140.250 | – $0.375 |
| Aug | $147.500 | – $0.200 |
| Sep | $149.350 | + $0.850 |
| Oct | $150.250 | + $1.225 |
| Nov | $150.475 | + $1.725 |
| Live Cattle | Jan. 15 | Change |
| Feb | $112.775 | – $1.700 |
| Apr | $118.200 | – $1.100 |
| Jun | $116.275 | + $1.000 |
| Aug | $117.025 | + $2.200 |
| Oct | $120.825 | + $2.400 |
| Dec | $123.475 | + $2.775 |
| Feb ’22 | $124.750 | + $2.550 |
| Apr | $125.750 | + $2.750 |
| Jun | $121.375 | + $3.625 |
| Corn | Jan. 15 | Change |
| Mar ’21 | $5.314 | + $0.352 |
| May | $5.346 | + $0.372 |
| Jly | $5.320 | + $0.374 |
| Sep | $4.854 | + $0.290 |
| Oct | $4.600 | + $0.196 |
| Mar ’22 | $4.654 | + $0.198 |
| Oil CME-WTI | Jan. 15 | Change |
| Feb | $52.36 | + $0.12 |
| Mar | $52.42 | + $0.16 |
| Apr | $52.36 | + $0.17 |
| May | $52.23 | + $0.19 |
| Jun | $52.04 | + $0.22 |
| Jly | $51.82 | + $0.28 |
Equities
| Equity Indexes | Jan. 15 | Change |
| Dow Industrial Average | 30814.26 | – 283.71 |
| NASDAQ | 12998.50 | – 204.37 |
| S&P 500 | 3768.25 | – 56.43 |
| Dollar (DXY) | 90.78 | + 0.71 |