Cash calf and feeder cattle prices mostly held their own or churned higher last week, as receipts increased and more farmer feeder were able to enter the market.
Steers and heifers sold steady to $4/cwt. higher, according to the Agricultural Marketing Service (AMS). That was with the second heaviest auction volume of the year at 360,400 head.
Other than $2.12 and 12¢ lower in the front two contracts, Feeder Cattle futures closed an average 36¢ higher week to week on Friday.
“Discounts continue to be applied to calves with short or no weaning programs, but they are not nearly as severe as what was being applied a month ago,” say AMS analysts. “Colder weather is helping to straighten calves out and making them a little less risky to own.”
As well, late harvest, weather, and truck availability continue to be issues in various parts of the country.
“Demand for lightweight calves in Montana was reduced by dry conditions on the West Coast,” explain AMS analysts. “Transportation issues in the Northern Plains tightened demand late in the week, due to limited truck availability. It’s farming time in the Northern Plains and farmers need those trucks hooked to their grain trailers. Farmer feeders are still working on corn harvest in the Northern Plains, which is going slow as corn is wet and must be dried. This is keeping some of these buyers out of the market on calves, as they simply don’t have the time to take on a bawling calf.” They add that propane rationing in the Upper Midwest and Eastern Corn Belt, could further delay harvest completion.
With all of that said, Andrew P. Griffith, agricultural economist at the University of Tennessee notes in his weekly market comments that value of gain is currently offering opportunity to add weight to calves.
“With the assumption of buying 425-575 lb. steers in November and carrying those calves for 150 days ,with an average daily gain of 2 lbs./day, the expected value of gain ranges from $1.42 to $1.54/lb., Griffith explains, in his weekly market comments. “There is no guarantee in the stated value of gain if no form of price risk management is used. Thus, to increase the probability of successfully reaching the stated value of gain, one would have to sell a futures contract or do something similar to successfully capture this value. There is a strong potential for profit in what the market is currently offering, but this profit potential will change as the market changes, which means producers can either speculate that the market will stay the same or go higher or they can hedge their bets and capture the value being offered today.”
Cash fed cattle prices grind higher
Negotiated cash fed cattle trade ended the week at $114-$115/cwt. in the Southern Plains, which was mainly $2 higher in Kansas and $2-$3 higher in the Texas Panhandle. In Nebraska, live trade was unevenly steady at $114-$116. Prices in the western Corn Belt were $1-$2 higher at $114-$115. Dressed trade was $1-$2 higher at $181-$182.
Other than 27¢ lower in spot Dec and unchanged in away Dec, Live Cattle futures closed an average of 62¢ higher week to week on Friday.
“The finished cattle market is trading $14 higher than its fall low, on a live basis, which occurred eight weeks ago,” Griffith says. “Live cattle futures are pricing in further gains before the end of the year, which could mean a 20% price improvement from the fall lows. Beyond the end of the year, and pushing into the spring of 2020, Live Cattle futures are predicting finished cattle to reach $126/cwt. The current expectation for April is about $3 lower than the highest single week average in the spring of 2019, which may be disappointing to some. However, there is a good possibility of live cattle experiencing a single weekly average in 2020 that meets or exceeds $130.”
AMS analysts point out increasing boxed beef values and strong packer margins continue to support fed cattle prices, while providing incentive for packers to keep running plants hard.
Choice boxed beef cutout value was $5.92 higher week to week on Friday at $239.12/cwt. Select was $5.75 higher at $213.26.
Beef Exports Remain Strong
U.S. beef exports in September were steady with last year in volume at 109,799 metric tons (mt), but value was 4% less at $661.3 million, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).
Through the first three quarters of the year, beef exports were 2% below last year’s record pace in both volume (991,325 mt) and value ($6.1 billion).
“While red meat exports face obstacles in some key markets, global demand dynamics are strong and we see opportunities for significant growth in the fourth quarter and into 2020,” says USMEF President and CEO Dan Halstrom. “Progress is being made on market access improvements and this makes for a very positive outlook going forward.”
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts # head Nov. 8 |
Auction (change) |
Direct (change) |
Video/Net (change) |
Total (change) |
|
360,400 (+85,800) |
49,600 (+600) |
23,900 (+21,900) |
433,900 (+108,300) |
CME Feeder Index
| CME Feeder Index* | Nov. 7 | Change |
| $145.84 | – $0.14 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Nov. 8 | Change |
| 600-700 lbs. | $150.43 | – $1.42 |
| 700-800 lbs. | $149.12 | – $0.97 |
| 800-900 lbs. | $147.72 | – $2.35 |
South Central
| Steers-Cash | Nov. 8 | Change |
| 500-600 lbs. | $152.47 | + $3.06 |
| 600-700 lbs. | $146.21 | + $3.48 |
| 700-800 lbs. | $145.95 | + $1.49 |
Southeast
| Steers-Cash | Nov. 8 | Change |
| 400-500 lbs. | $144.41 | + $5.46 |
| 500-600 lbs. | $136.06 | + $3.74 |
| 600-700 lbs. | $131.11 | + $1.73 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Nov. 8 ($/cwt) | Change |
| Choice | $239.12 | + $5.92 |
| Select | $213.26 | + $5.75 |
| Ch-Se Spread | $25.86 | + $0.17 |
Futures
| Feeder Cattle | Nov. 8 | Change |
| Nov | $147.000 | – $2.125 |
| Jan ’20 | $145.875 | – $0.125 |
| Mar | $145.500 | + $0.375 |
| Apr | $146.825 | + $0.425 |
| May | $147.350 | + $0.175 |
| Aug | $151.850 | + $0.150 |
| Sep | $152.225 | + $0.275 |
| Oct | $152.075 | + $0.750 |
| Live Cattle | Nov. 8 | Change |
| Dec | $119.250 | – $0.275 |
| Feb ’20 | $125.025 | +$0.800 |
| Apr | $126.100 | +$0.650 |
| Jun | $118.275 | +$0.525 |
| Aug | $115.775 | +$0.475 |
| Oct | $116.850 | +$0.575 |
| Dec | $118.725 | -0- |
| Feb ’21 | $120.425 | +$0.350 |
| Apr | $121.225 | +$0.950 |
| Corn futures | Nov. 8 | Change |
| Dec | $3.772 | – $0.120 |
| Mar ’20 | $3.864 | – $0.120 |
| May | $3.934 | – $0.110 |
| Jul | $3.996 | – $0.104 |
| Sep | $3.962 | – $0.062 |
| Dec | $4.010 | – $0.046 |
| Oil CME-WTI | Nov. 8 | Change |
| Dec | $57.24 | + $1.04 |
| Jan ’20 | $57.26 | + $0.99 |
| Feb | $57.10 | + $0.95 |
| Mar | $56.77 | + $0.91 |
| Apr | $56.40 | + $0.56 |
| May | $55.99 | + $0.79 |
Equities
| Equity Indexes | Nov. 8 | Change |
| Dow Industrial Average | 27681.24 | + 333.88 |
| NASDAQ | 8475.31 | + 88.91 |
| S&P 500 | 3093.08 | + 26.17 |
| Dollar (DXY) | 98.40 | + 1.28 |