Winter weather and muddy feedlot pens continued to hamper calf and feeder cattle demand last week, with steers and heifers selling $2-$6/cwt. lower, according to the Agricultural Marketing Service (AMS).
“The larger drop in the market occurred in the regions affected by Winter Storm Gia the previous weekend and the forecasted Winter Storm Harper last weekend,” explained AMS analysts. “A vast area of the Plains states are dealing with excess moisture this time of year with more on the way.”
Week to week on Friday, Feeder Cattle futures closed an average of $2.27 lower across the front half of the board ($1.00 lower to $4.67 lower in spot Jan) and then an average of 40¢ lower.
“Feedlots are in no humor to purchase cattle and transport them through wet and icy road conditions to then run the calves off the truck into muddy pens,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “At the same time, cattle feeders are in no humor to pay big dollars for feeder cattle that will be placed against the June and August Live Cattle futures that are at a $10 and $14 discount to April, respectively.”
Locally, Griffith pointed out the aforementioned summer discount had pressured load lot prices for heavy yearlings about $5/cwt. lower in January, compared to the previous month, as much as $15 lower compared to November.
“The bright spot is that the price of a 900 lb. steer is the same as the price of an 800 lb. steer, which provides incentive to keep feeding cattle and growing them larger,” Griffith says. “The price signal on heavy feeder cattle is the market signal feedlot managers are sending to producers. At this time, the best decision may be to keep feeding 700 and 800 lb. feeder cattle and keep an eye on the cash market.”
Fed Cattle Prices Appeared Steady to Higher
Although cattle feeders with muddy lots were looking to move cattle, and presumably, packers had a need to refurbish inventory, fed cattle trade remained at an impasse through Friday afternoon, based on USDA reports. However, indications suggested prices no worse than steady, perhaps a touch higher.
Week to week on Friday, Live Cattle futures closed 25¢ to $1.55 higher in the front three contracts and then an average of 57¢ lower.
“Since the middle of November, the February live cattle contract price has increased by $9, which amounts to approximately $120 per head value increase,” Griffith explains. “On the cash side of the business, prices increased $10/cwt. from the middle of November to the previous week and this last week’s prices appeared geared to gain another couple of dollars. Over this time period, cattle feeding margins and packer margins have been flipped as cattle feeders appear to be in control of the leverage.”
Leverage should have been supported last week by firmer wholesale beef prices. Week to week on Friday, Choice boxed beef cutout value was 69¢ higher at $213.15/cwt. Select was $3.18 higher at $209.45. The Choice-Select spread was the narrowest since September of 2017 at $3.70.
Friday to Friday Change*
Weekly Auction Receipts
*Compared to two weeks earlier
CME Feeder Index
|CME Feeder Index*||Jan. 17||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$157.41||– 3.29|
|700-800 lbs.||$146.83||– 3.17|
|800-900 lbs.||$141.71||– 1.90|
|500-600 lbs.||$158.12||– 4.68|
|600-700 lbs.||$144.39||– $4.93|
|700-800 lbs.||$137.71||– $6.02|
|400-500 lbs.||$152.70||– $5.64|
|500-600 lbs.||$143.83||– $4.68|
|600-700 lbs.||$135.57||– $4.41|
*Compared to two weeks earlier
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Jan. 18 ($/cwt)||Change|
|Ch-Se Spread||$3.70||– $2.49|
|Feeder Cattle||Jan. 18||Change|
|Jan ’19||$141.450||– $4.675|
|Live Cattle||Jan. 18||Change|
|Feb ’19||$126.525||+ $1.550|
|Feb ’20||$118.675||– $0.575|
|Corn futures||Jan. 18||Change|
|Mar ’19||$3.816||+ $0.034|
|Mar ’20||$4.126||+ $0.020|
|Oil CME-WTI||Jan. 18||Change|
|Equity Indexes||Jan. 18||Change|
|Dow Industrial Average||24706.35||+ 710.40|
|S&P 500||2670.71||+ 74.45|
|Dollar (DXY)||96.36||+ 0.69|