Recent futures market strength, stronger wholesale beef values and higher negotiated cash fed cattle prices added support to calves and feeder cattle last week.
Steers and heifers sold $2-$5/cwt. higher, with instances of $7-$10 higher at some auctions, according to the Agricultural Marketing Service (AMS).
“Calf movement in the Northern Plains is in full swing as drought conditions bring cattle to town earlier than normal,” say AMS analysts. “With the earlier time period of marketing their calves, drought-stricken ranchers are selling less pounds which will lead to less dollars in the bank account.”
With that said, year-to-date auction receipts through last week were 487,000 head fewer than the same period last year, according to AMS; 520,000 head fewer than the five-year average. Direct receipts for the last five weeks are more than 70,000 head behind last year’s pace.
Feeder Cattle futures closed an average of $1.65 higher week to week on Friday (65¢ to $2.20 higher) except for 22¢ lower in spot Nov. That was in the face of stronger grain prices fueled by the crop friendly World Agricultural Supply and Demand Estimates (WASDE)
USDA increased the projected season-average corn price by 40¢ to $4.00/bu., on reduced expected corn yield, production and ending stocks. The same drivers were behind the 60¢ increase in the projected season-average soybean price to $10.40/bu.
Week to week on Friday, Corn futures closed an average of 7¢ higher through the front six contracts. Soybean futures closed an average of 46¢ higher through the front six contracts.
Cattle futures also gained week to week despite a sharp drop Friday, tied to apparent concerns that escalating COVID-19 cases could once again disrupt packing production.
“October was a tough month for calf prices, but if the first two weeks of November is any indication of what is to come, then cattle producers should be seeing the light at the end of the tunnel,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Steer and heifer calf prices surged the past two weeks, based on Tennessee weekly auction market average prices. It is clear that stocker and backgrounding operations still have a strong demand for weaned and preconditioned cattle, but calves being weaned on the truck have also seen a price boost…There is a good chance that freshly weaned calf values increase $20 to $30 per head before the end of the year if there is any bounce in the market at all heading into December.”
Prices in the Southern Plains were also boosted by recent moisture and elevated wheat pasture prospects.
For instance, in Oklahoma, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says prices the previous week for steers weighing 450-600 lbs. were the highest since late August and early September. He notes the combined state auction price for Medium and Large #1 steers at 450-500 lbs. the previous week was $166.89/cwt. compared to $147.34 a week earlier, when storm severity helped damper markets.
Noting currently higher value of gain for cattle heavier than 600 lbs., as well as a possibly shorter winter grazing season, Peel says, heavier starting weights might make sense for stocker producers to consider.
“The next few weeks may result in additional demand for stockers but will likely also see larger supplies of feeder cattle in Oklahoma auctions. Combined Oklahoma auction volume the past six weeks was down nearly 33%, in part due to the impacts of the winter storm,” Peel explained in his weekly market comments. “It appears there are significant numbers of calves and feeders yet to be marketed this fall. Stocker and feeder prices could move either higher or lower in the next month depending on the balance of increased demand and increased supply in auctions.”
Fed Cattle Prices Increase
Negotiated cash fed cattle tradeended the week with live prices $3 higher at $110/cwt. in Nebraska and the Southern Plains; $3-$4 higher in the western Corn Belt at $108-$110. Dressed prices were at $172, which was $4 higher in Nebraska and $5-$8 higher in the western Corn Belt. Although prices were higher, some thought the market was poised to reap steeper gains.
Through Thursday, the five-area direct weighted negotiated fed steer price was $109.46/cwt. on a live basis, which was $3.11 more than the previous week but $5.69 less than the same week in 2019. The average steer price in the beef was $171.88, which was $6.58 more week to week but $10.07 less year over year.
Live Cattle futures closed an average of 92¢ higher week to week on Friday, from 7¢ higher in near Feb to $1.65 higher.
“The value of cattle this week compared to last week represents an increase of $35 to $40 per head, which makes hitting the $115/cwt. price that much more achievable before the end of the year,” Griffith says. “The strong margins at the packer level and good beef demand have packers salivating for cattle. Some of the strong margins upstream have been passed down to cattle feeders, and cattle feeders are doing the same when purchasing feeder cattle. Optimism in the market is strong heading toward December.”
Estimated total cattle slaughter for the week ending Nov. 14 was 653,000 head, which was 6,000 head more than the previous week but 16,000 head fewer than the same week last year. Estimated year-to-date total cattle slaughter of 28.06 million head would be 1.07 million fewer (-3.67%) than the previous year. Estimated total year-to-date beef production was 23.31 billion lbs., which would be 253.3 million lbs. less (-0.01%) than the previous year.
Choice boxed beef cutout value was $11.66 higher week to week on Friday at $225.98/cwt. Select was $10.97 higher at $209.46. That’s $17.88 higher for Choice over the past two weeks; $18.22 higher for Select.
Carcass weights show signs of peaking following the prolonged period of fed cattle supplies backlogged by the pandemic. The average dressed steer weight of 926 lbs. the week ending Oct. 31 was 5 lbs. lighter than the previous week, though still 23 lbs. heavier than the same week last year. The average dressed heifer weight of 848 lbs. was 1 lb. heavier than the prior week and 13 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report.
“Select grade beef continues to see fairly decent demand during a time when Choice grade prime rib and other holiday cuts take center stage. There is no doubt some holiday purchasing is taking place, but the strong prices for boxed beef could just be simply demonstrating that beef prices are being supported by good demand at the consumer level,” Griffith says. “There always seems to be concern that consumer discretionary spending may move away from beef when things get tight. However, due to the pandemic, many consumers have more than ample discretionary dollars because they are not able to participate in many of their extracurricular activities. Thus, lower incomes may be evident in many households, but leisure expenditures have also been reduced. It will be interesting to see if consumer expenditures revert back to pre-pandemic tendencies moving forward.”
Friday to Friday Change
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||Nov. 12||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$149.58||+ $1.37|
|700-800 lbs.||$141.53||+ $0.20|
|800-900 lbs.||$142.02||+ $1.80|
|500-600 lbs.||$151.87||+ $3.03|
|600-700 lbs.||$140.85||+ $2.28|
|700-800 lbs.||$139.69||+ $4.68|
|400-500 lbs.||$151.67||+ $3.83|
|500-600 lbs.||$138.53||+ $4.27|
|600-700 lbs.||$129.18||+ $2.45|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Nov. 13 ($/cwt)||Change|
|Ch-Se Spread||$16.52||+ $0.69|
|Feeder Cattle||Nov. 13||Change|
|Jan ’21||$137.825||+ $1.900|
|Oct ’21||$144.875||+ $0.650|
|Live Cattle||Nov. 13||Change|
|Feb ’21||$112.225||+ $0.075|
|Feb ’22||$118.000||+ $0.700|
|Mar ’21||$4.194||+ $0.058|
|Oil CME-WTI||Nov. 13||Change|
|Jan ’21||$40.40||+ $2.91|
|Equity Indexes||Nov. 13||Change|
|Dow Industrial Average||29479.81||+ 1156.41|
|S&P 500||3585.15||+ 75.71|
|Dollar (DXY)||92.72||+ 0.49|