Cattle Current Weekly Highlights—Week ending Jan. 8, 2021

Cattle Current Weekly Highlights—Week ending Jan. 8, 2021

Cattle markets were mixed and tenuous last week amid plenty of uncertainty: everything from the potential demand impact of continually rising COVID-19 cases to the relentless rise in feed costs.

Judging by the weekly auction sales monitored by Cattle Current, the turn of the calendar and mostly conducive weather, prompted heavy market volume last week. Where week-to-week trends were available, prices were steady to mixed across a wide range.

“Demand was reported as good throughout the nation the first full marketing week of 2021. The first full week of the year is typically the largest volume week of the year and this year was no exception with a heavy supply of cattle covering the entire weight spectrum,” AMS analysts explain. “Lightweight grazing type calves with many more days left before heading to a feedyard found the best demand as there is a lot more time for them to offer opportunities for profit.”

With the new year, AMS switched to releasing weekly calf and feeder cattle market summary data from Friday of each week to Monday, in order to have a more comprehensive weekly snapshot.

“Regardless of the physical marketings, most years start with optimism, but that has not been reflected in the Feeder Cattle futures market the first week of the year,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “In actuality, Feeder Cattle futures began to slip following the Christmas holiday and that slide continued into the first week of 2021.”

That has plenty to do with surging grain prices, tied to tighter global supplies, dry conditions in South America, speculation about a La Niña drought in North America this spring and strong export demand, supported by the weak U.S. dollar.

Week to week on Friday, compared to the previous Thursday, Corn futures closed an average of 14¢ higher through the front three contracts; an average of 49¢ higher in those contracts over the last two weeks. 

Soybean futures closed an average of 60¢ higher through the front six contracts. That’s an average of about $1 higher for those contracts over the last two weeks.

Week to week, Feeder Cattle futures closed an average of $2.19 lower (35¢ to $3.40 lower) except for an average of 75¢ higher in the back two contracts. 

“January Feeder Cattle futures prices have declined about $5/cwt. since Christmas with most of the other contract months following its lead,” Griffith says. “This decline definitely put a damper on local cattle prices this week. Those that will be impacted the most are producers who waited until the new year to market cattle…As of right now, there appears to be more pressure on the cattle market than information to support higher prices, but odder things have happened. Prices in 2021 are expected to exceed prices in 2020 for most classes of cattle.”

“Cattle production will be affected by higher feed prices, not so much in terms of how much production will occur, but more in terms of how production will change,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in is weekly market comments. “For example, higher ration costs will change feedlot demand for the type and size of feeder cattle preferred in feedlots.”

Fed Cattle Prices Steady to Higher

Despite early hopes and fundamentals suggesting higher negotiated cash fed cattle prices, they ended the week generally unevenly steady.

Live prices were steady in the Southern Plains at $112/cwt., steady to $1 lower in Nebraska at $110-$111, steady to $1 higher in Colorado at $112 and steady to $2 lower in the western Corn Belt at $110. Dressed prices were steady to $1 higher at $176 in Nebraska and at $175-$177 in the western Corn Belt, according to AMS.

Through Thursday, the average five-area direct fed steer price was 1¢higher on a live basis at $111.49/cwt. The average steer price in the beef was 47¢ higher at $176.02.

Estimated cattle slaughter of 651,000 head for the week ending Jan. 9 was 136,000 head more than the previous holiday week. Estimated beef production of 544.9 million lbs. was 15.4 million lbs. more (+2.9%) than the same week a year earlier.

Week to week on Friday, compared to the previous Thursday, Live Cattle futures closed an average of 50¢ higher except for 55¢ lower in spot Feb and $5.57 lower in recently minted away-Jun. 

“Given that prices held steady in the South and were $1 higher in the North bodes well for an increasing market. The key to a strengthening market is probably in beef consumers’ hands,” Griffith says.

“Choice Boxed-beef values continue to see some erosion, trading near their lows as January is not noted as a consumer beef month, with loins and ribs down considerably since the holidays,” say AMS analysts.

Choice boxed beef cutout value was $3.15 lower at $206.80/cwt. week to week on Friday, compared to the previous Thursday. Select was $1.04 higher at $196.69.

The average dressed steer weight the week ending Dec. 25 was 913 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 8 lbs. less than the previous week but 8 lbs. heavier than the same week a year earlier. The average dressed heifer weight of 839 lbs. was 8 lbs. less than the previous week but 2 lbs. heavier than the prior year.

“Strong beef demand and tightening cattle supplies provide cautious optimism for cattle markets in 2021,” Peel says. “Higher feed prices and continuing drought conditions are threats to individual producers and perhaps to overall market conditions in the coming year. Consumer demand will be supported by additional federal stimulus for a time but continuing macroeconomic challenges will persist through the year. The continuing pandemic and the time needed for vaccine implementation suggest that much of the promise of 2021 may be pushed into the second half of the year. In the meantime, uncertainty and volatility are likely to remain elevated and risk management continues to be a key management and marketing consideration.”

Friday to Friday Change

Weekly Auction Receipts

Compared to Dec. 18, the most recent previous week available…

Jan. 9 Auction Direct

Video/net

Total
 

349,800

(+112,600)

40,300

(-1,700)

87,300

(+60,600)

477,400

(+171,500)

 

CME Feeder Index

Thursday through Thursday…

CME Feeder Index* Jan. 7 Change
  $135.63 –   3.14

*Wednesday-to Wednesday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Jan. 8 Change
600-700 lbs. $151.54 +  $4.76
700-800 lbs. $141.00 +  $4.19
800-900 lbs. $134.78 +  $2.30

South Central

Steers-Cash Jan. 8 Change
500-600 lbs. $157.32 + $0.06
600-700 lbs. $142.31 –  $2.48
700-800 lbs. $134.55 –  $3.08

Southeast

Steers-Cash Jan. 8 Change
400-500 lbs. $151.95 –  $1.38
500-600 lbs. $142.66 + $1.94
600-700 lbs. $131.91 + $2.96

*most recent previous week available.

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Prior Thursday through Friday…

Boxed Beef  (p.m.) Jan. 8 ($/cwt) Change
Choice $206.80 –  $3.15
Select $196.69 + $1.04
Ch-Se Spread $10.11 –  $4.19

 

Futures

Prior Thursday through Friday…

Feeder Cattle  Jan. 8 Change
Jan  $135.825 –  $3.125
Mar $136.825 –  $3.400
Apr $139.075 –  $2.700
May $140.625 –  $2.225
Aug $147.700 –  $1.325
Sep $148.500 –  $0.350
Oct  $149.025 + $0.750
Nov $148.750 + $0.750

 

Prior Thursday through Friday…

Live Cattle   Jan. 8 Change
Feb $114.475 –  $0.550
Apr $119.300 + $0.050
Jun $115.275 + $0.575
Aug $114.825 + $0.400
Oct $118.425 + $0.825
Dec $120.700 + $0.650
Feb ’22 $122.200 + $0.525
Apr $123.000 + $0.500
Jun $117.750 –  $5.575

 

Prior Thursday through Friday…

Corn  Jan. 8 Change
Mar ’21 $4.962 + $0.122
May $4.974 + $0.142
Jly $4.946 + $0144
Sep $4.564 + $0.100
Oct $4.404 + $0.058
Mar ’22 $4.456 + $0.054

 

Prior Thursday through Friday…

Oil CME-WTI Jan. 8 Change
Feb $52.24 + $3.72
Mar $52.26 + $3.63
Apr $52.19 + $3.50
May $52.04 + $3.35
Jun $51.82 + $3.19
Jly $51.54 + $3.02

 

Equities

Prior Thursday through Friday…

Equity Indexes Jan. 8 Change
Dow Industrial Average  31097.97 +  491.49
NASDAQ  13201.97 +   313.69
S&P 500   3824.68 +     68.61
Dollar (DXY)       90.07 +       0.13
2021-01-16T14:42:10-06:00

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