Calves and feeder cattle continued to trade mixed last week, but mainly higher, with the strongest demand for grass cattle once again.
Nationwide, steers and heifers sold mostly steady to $5/cwt. higher, with instances of $6-$8 higher, according to the Agricultural Marketing Service (AMS).
“Buyers pursued all classes of feeder cattle, despite high feed cost,” say AMS analysts. “The supply of feeders weighing 600-950 lbs. is much greater, with backgrounded steers and heifers, and saw moderate to good demand, especially for those with good weighing conditions.”
AMS analysts also note auction receipts were lighter in the Midwest and Northern Plains last week as some auctions transition to a semi-monthly schedule and as the late winter storm hampered some cattle movement.
High corn prices and stagnant cash fed cattle prices helped pressure Cattle futures last week, although fundamentals suggest markets are on the cusp of moving higher.
“After the fed cattle market works through ample cattle supplies in the first half of the year, beef production is expected to decrease year over year in the second half of the year. Live Cattle futures for the fall suggest higher fed cattle prices in the last half of the year,” says, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.
Similarly, Peel points to the premium for fall Feeder Cattle futures, compared to nearby contracts, explaining that summer stocker prospects are promising at this point in time.
“Feeder steer prices for February 2021 averaged $131.82/cwt. for steers weighing 750-800 lbs., sold at Oklahoma National Stockyards, just over $6 above a year ago,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “However, prices for the first two weeks of March are almost $8 above the same month last year.”
ERS increased the expected first-quarter average for feeder steers by $1 to $133/cwt. Price projections were unchanged for the remainder of the year: $134 in the second quarter; $139 in the third quarter; $140 in the fourth quarter; $136.50 for the 2021 average.
In the meantime, Feeder Cattle futures gave back a majority of the previous week’s gains, closing an average of $1.89 lower week to week on Friday (90¢ lower toward the back to $3.80 lower toward the front).
Week to week on Friday, Corn futures closed an average of 14¢ higher in the front two contracts (old crop) and then an average of about 7¢ lower through the next four.
Fed Cattle Prices Show Some Give
Negotiated cash fed cattle prices last week were steady on a live basis at $114/cwt. in Kansas, steady to $1 higher in Nebraska at $114, $1-$2 higher in the western Corn Belt at $114-$115. Prices were a touch higher than steady in the Texas Panhandle, with the Texas Cattle Feeders Association reporting $114.24 for steers and $114.30 for heifers. Dressed trade was $2 higher in Nebraska and $2-$4 higher in the western Corn Belt at $182.
“Live steer prices in the five-area marketing region are nearly flat since the first week of February, hovering around $114/cwt., despite a strong rally in the comprehensive cutout to near-record levels for the month of February,” explain ERS analysts. “An abundant supply of fed cattle on feed over 150 days Feb. 1 that is greater than the same time last year, along with the inability to process a portion of those cattle due to the winter storm system in February, likely did not support higher prices in line with typical seasonal patterns.”
Week to week on Friday, Live Cattle futures closed an average of $1.26 lower (35¢ lower at the back to $2.20 lower).
“Cattle feeders have watched the Apr Live Cattle contract continue to struggle, unable to get to the $120.00 mark, as Apr is normally the high of the year, when supplies of market-ready cattle are the tightest,” say AMS analysts. “We have seen a very unusual premium in the Live Cattle Jun and Aug contracts for this time of year.”
Choice boxed beef cutout value was $4.12 higher week to week on Friday at $229.99/cwt. Select was 32¢ lower at $219.95.
“Boxed beef cutout values are finding a bottom and seeing strength, as the food service industry is expected to see more business, with expectations for restaurant industry sales to increase through spring into summer,” according to AMS analysts. As well, they point to expectations for increased retail demand heading into grilling season.
No COF Surprises
Cattle feeders placed 1.68 million head in February, according to the monthly Cattle on Feed report from USDA—for feedlots with 1,000 head or more capacity. That was 1.86% less than a year earlier and close to average expectations ahead of the report for a decline of 1.7%.
Recent winter storms that closed sale barns may have limited placements. On the other hand, current and expected wheat prices may elevate feedlot placements in March, as more producers with a dual-purpose winter wheat crop look to put it in the bin.
“…the expectation that relatively high wheat prices may discourage the grazing-out of small grains pastures and move more cattle into feedlots sooner than previously expected is anticipated to shift placements from the second quarter to the first quarter,” ERS analysts say. “As a result, some fed cattle marketings are expected to shift from the fourth quarter to the third quarter.”
Feedlot marketings in February of 1.73 million head were 43,000 head fewer (-2.42%) year over year. Expectations ahead of the report were for a decline of 2.6%.
“Because of the weather disruption, there is a temporal shift of expected steer and heifer marketings out of the first quarter to be marketed in the second quarter,” say ERS analysts.
Cattle on feed March 1 of 12.0 million head were 189,000 head more (+1.60%), the second highest inventory for the month since the data series began in 1996. Average pre-report expectations were for an increase of 1.5%.
Friday to Friday Change
Weekly Auction Receipts
| Mar. 22 | Auction | Direct |
Video/net |
Total |
|
164,400 (-138,800) |
61,600 (+2,700) |
3,700 (-6,500) |
229,700 (-164,300) |
CME Feeder Index
Thursday through Thursday…
| CME Feeder Index* | Mar. 18 | Change |
| $134.03 | – $0.10 |
*Wednesday-to Wednesday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Mar. 22 | Change |
| 600-700 lbs. | $152.77 | – $1.64 |
| 700-800 lbs. | $141.94 | + $0.09 |
| 800-900 lbs. | $134.01 | + $3.06 |
South Central
| Steers-Cash | Mar. 22 | Change |
| 500-600 lbs. | $163.90 | + $0.90 |
| 600-700 lbs. | $148.58 | + $0.23 |
| 700-800 lbs. | $138.07 | + $1.48 |
Southeast
| Steers-Cash | Mar. 22 | Change |
| 400-500 lbs. | $163.09 | + $0.22 |
| 500-600 lbs. | $149.77 | + $1.15 |
| 600-700 lbs. | $137.47 | + $1.15 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Mar. 19 ($/cwt) | Change |
| Choice | $229.99 | + $4.12 |
| Select | $219.95 | – $0.32 |
| Ch-Se Spread | $10.04 | + $4.44 |
Futures
| Feeder Cattle | Mar. 19 | Change |
| Mar | $134.675 | – $1.675 |
| Apr | $139.425 | – $3.800 |
| May | $144.675 | – $3.700 |
| Aug | $154.925 | – $1.650 |
| Sep | $155.825 | – $1.325 |
| Oct | $156.350 | – $0.975 |
| Nov | $156.600 | – $0.900 |
| Jan ’22 | $155.000 | – $1.100 |
| Live Cattle | Mar. 19 | Change |
| Apr | $118.400 | – $0.600 |
| Jun | $118.675 | – $1.750 |
| Aug | $117.775 | – $2.000 |
| Oct | $121.500 | – $2.200 |
| Dec | $124.200 | – $1.700 |
| Feb ’22 | $127.125 | – $1.100 |
| Apr | $128.100 | – $0.900 |
| Jun | $122.800 | – $0.775 |
| Aug | $122.150 | – $0.350 |
| Corn | Mar. 19 | Change |
| May | $5.576 | + $0.186 |
| Jly | $5.386 | + $0.102 |
| Sep | $4.894 | – $0.066 |
| Oct | $4.714 | – $0.072 |
| Mar ’22 | $4.792 | – $0.072 |
| May | $4.840 | – $0.062 |
| Oil CME-WTI | Mar. 19 | Change |
| Apr | $61.42 | – $4.19 |
| May | $61.44 | – $4.20 |
| Jun | $61.31 | – $4.05 |
| Jly | $61.01 | – $3.83 |
| Aug | $60.57 | – $3.62 |
| Sep | $60.05 | – $3.43 |
Equities
| Equity Indexes | Mar. 19 | Change |
| Dow Industrial Average | 32627.97 | – 150.67 |
| NASDAQ | 13215.24 | – 104.63 |
| S&P 500 | 3913.10 | – 30.24 |
| Dollar (DXY) | 91.74 | + 0.06 |