Wobbly Feeder Cattle futures and the sheer number of calves crossing the auction block ahead of Thanksgiving helped pressure calf and feeder cattle prices last week, despite renewed farmer-feeder interest in the north.
Nationwide, steers and heifers traded steady to $3 lower, according to the Agricultural Marketing Service (AMS). Those analysts point out weaned calves with good condition continue to sell at premium to un-weaned, fleshy peers.
Feeder Cattle futures closed an average $4.08 lower week to week on Friday. Most of that came Friday, amid pessimism ahead of the monthly Cattle on Feed report.
As widely expected, feedlot placements in October were significantly higher—up 10.19% more (+299,000 head) compared to last year at 2.48 million head. That was still 2% less than consensus projections ahead of the report. It’s also worth keeping in mind that placements the previous October were slacker due to early calf marketing borne by regional drought.
Feedlot marketings in October of 1.88 million head were 0.64% less (-12,000 head), which was in line with expectations.
As of Nov. 1, there were 11.83 million head on feed, which was 1.19% more (+139,000 head) than the previous year.
Fed Cattle Prices Grind Higher
Negotiated cash fed cattle trade last week was mainly $1 higher on a live basis at $116/cwt. in the Southern Plains and at $115-$117 up north. Dressed trade was $2 higher at $184.
Tyson Fresh Meats—the beef and pork subsidiary of Tyson Foods, Inc.—announced Monday that efforts to resume harvest operations at its Holcombe, KS beef plant will begin the first week of December, with intentions to be fully operational by the first week of January. It plans to resume receiving cattle at the facility the first week of December.
After 42¢ lower in spot Dec, Live Cattle futures closed an average of $1.67 lower week to week on Friday.
Choice boxed beef cutout value was $8.23 lower week to week on Friday at $232.57/cwt. Select was $3.01 lower at $211.32.
“The largest portion of holiday beef buying is coming to an end just prior to the Thanksgiving holiday. The market will likely decline further with the short week of trading next week,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “However, there is likely to be some frenzied beef buying in the weeks leading up to Christmas, as some will realize they are short bought and need a little more inventory to meet consumers’ demand. Thus, beef cutout prices will be well supported through the end of the year. With the change in the calendar year, cutout prices are expected to soften as beef demand seasonally softens during the winter months and as consumers focus more on end meats instead of middle meats.”
Beef price support from U.S. beef exports is a wild card heading into 2020, but appears poised to strengthen, due in part to the global animal protein deficit cleaved by African Swine Fever.
“While beef exports (U.S.) are likely to end 2019 with an almost 2% decline, shipments are expected to rebound in 2020 by about 7%, as drought in competitor Australia reduces its exportable supply at the same time as beef demand continues to expand in Asia,” say analysts with USDA’s Economic Research Service (ERS), in the November Livestock, Dairy and Poultry Outlook.
In the meantime, Griffith explains slaughter cow and bull prices are churning against typical seasonal pressure as 90% lean beef prices continue to soar.
“Cow slaughter, which is the primary source of 90% lean manufacturing beef, in 2019, is about 163,000 head higher than the same time period in 2018. One would think that increased production would result in lower prices, but there are more factors at play,” Griffith explains. “Australia is generally the largest import source of such beef to the United States, but high prices on Australian beef have tempered imports of lean manufacturing beef. Australia is sending considerable quantities of manufacturing beef to China, which is searching for meat protein to make up for the decline in pork production. This same situation has bolstered fresh 50% lean beef, which is sourced from trimmings of finished cattle. This has added some value to finished cattle, which should make its way down the production line.”
Friday to Friday Change*
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||Nov. 21||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$150.37||– $1.71|
|700-800 lbs.||$147.78||– $2.30|
|800-900 lbs.||$146.44||– $3.45|
|500-600 lbs.||$151.38||– $1.89|
|600-700 lbs.||$144.41||– $2.14|
|700-800 lbs.||$144.62||– $2.49|
|400-500 lbs.||$144.30||– $0.30|
|500-600 lbs.||$135.22||– $0.36|
|600-700 lbs.||$131.04||+ $0.08|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Nov. 22 ($/cwt)||Change|
|Ch-Se Spread||$21.25||– $5.22|
|Feeder Cattle||Nov. 22||Change|
|Jan ’20||$139.275||– $5.000|
|Live Cattle||Nov. 22||Change|
|Feb ’20||$123.850||– $1.125|
|Feb ’21||$118.250||– $1.425|
|Corn futures||Nov. 22||Change|
|Mar ’20||$3.784||– $0.022|
|Oil CME-WTI||Nov. 22||Change|
|Jan ’20||$57.77||– $0.06|
|Equity Indexes||Nov. 22||Change|
|Dow Industrial Average||27875.62||– 128.87|
|S&P 500||3110.93||– 9.53|
|Dollar (DXY)||98.27||+ 0.27|