While discounts are increasing for un-weaned calves, demand continues strong for the dwindling supply of yearlings, according to the Agricultural Marketing Service (AMS).
“As the cash fed cattle market works its way higher and the supply of yearlings gets tighter, buyers are willing to chase the feeder market,” explained the AMS reporter on hand for Monday’s weekly auction at Sioux Falls Regional in South Dakota, where yearlings traded steady with instances of $2 higher.
Nationwide, AMS pegged the trend for cash calves and feeders at $3/cwt. lower to $2 higher, with calves in the Northern Plains trading for as much as $8 lower.
“The Southeast started to move more calves this week, compared to recent weeks and the demand would be considered moderate to good,” say AMS analysts. “Demand for feeders is good for those calves weaned at least 45 days and preferably for 60 days, along with a couple of rounds of shots.”
Although auction receipts increased week to week, winter weather in the Northern Plains and muddy feedlot conditions continued to limit demand. This year’s extended wet weather also appears to be weighing on weaning weights in some areas.
“In Nebraska, most sellers pick a week and sell their livestock at about the same time every year. The bulk of the calves and some yearlings are a few pounds lighter than last year,” AMS analysts explain. “Most pasture grass grew rapidly all summer and never hardened up. A lot of producers complained about washy grass and it has affected the weaning weight on a lot of calves.”
Feeder Cattle futures grew more optimistic, closing an average of $1.91 higher week to week on Friday (80¢to $2.87 higher). That was thanks to a mid-week surge that was difficult to explain.
Stronger futures also came in the face of Corn futures that were an average of 11¢ higher through the front four contracts week to week. Traders took Corn down hard Thursday, with bearish estimates in the World Agricultural Supply and Demand Estimates. They rebounded Friday with reports that the U.S. and China reached agreement to a phased approach to its trade standoff, which will suspend added tariffs, for now at least.
Carcass Weights Suggest Market Currentness
Except for some early sales in the North, negotiated cash fed cattle trade remained undeveloped through Friday afternoon, based on USDA reports.
Early dressed sales in Nebraska were $2 higher than the previous week at $172/cwt. Early dressed sales also were trading for $172 in the western Corn Belt, but too few to trend. Live sales in the western Corn Belt were steady to $2 higher than the previous week at $109. Live sales were at $109-$110 in Nebraska, but too few to trend.
Through Thursday, the average five-area direct fed steer price was $3.36 higher week to week at $109.08/cwt. on a live basis. The average dressed steer price was $3.44 higher at $170.08.
Live Cattle futures continued to extend recent gains, closing an average of $1.24 higher week to week on Friday (95¢higher to $2.10 higher in spot Oct).
Earlier in the week, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University explained market impacts from the Tyson plant fire have mostly dissipated.
“Limited packing capacity will likely continue to restrict fed cattle prices somewhat, but it appears the industry has thus far avoided even worse implications of a serious backlog of fed cattle and a pronounced lack of ability to process cattle in a timely fashion,” Peel explained, in his weekly market comments.
Wholesale beef values also appear to have found a seasonal bottom.
Choice boxed beef cutout value was $3.70 higher week to week on Friday at $215.66/cwt. Select was $1.76 higher at $188.68.
Moreover, Andrew P. Griffith, agricultural economist at the University of Tennessee says retail beef prices are demand neutral. In his weekly market comments, he explains the all fresh beef retail price last month was $5.78/lb., which was 7¢less than the prior month and 5¢higher than the same time a year earlier.
“Total meat production is something to keep an eye on while trade deals are hashed out,” Griffith says. “It will take some strong trade deals and China importing a lot of meat protein from any country to help support prices and clear the market.”
Friday to Friday Change*
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||Oct. 10||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$151.30||– $1.06|
|700-800 lbs.||$148.02||– $4.18|
|800-900 lbs.||$146.47||– $0.51|
|500-600 lbs.||$148.28||– $1.02|
|600-700 lbs.||$145.85||– $1.16|
|700-800 lbs.||$145.62||– $0.45|
|400-500 lbs.||$140.02||+ $0.95|
|500-600 lbs.||$131.85||+ $1.56|
|600-700 lbs.||$127.77||+ $1.49|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Oct. 11 ($/cwt)||Change|
|Ch-Se Spread||$26.98||+ $1.94|
|Feeder Cattle||Oct. 11||Change|
|Jan ’20||$140.475||+ $3.500|
|Live Cattle||Oct. 11||Change|
|Corn futures||Oct. 11||Change|
|Oil CME-WTI||Oct. 11||Change|
|Jan ’20||$54.72||+ $2.16|
|Equity Indexes||Oct. 11||Change|
|Dow Industrial Average||26816.59||+ 242.87|
|S&P 500||2970.27||+ 18.16|
|Dollar (DXY)||98.33||– 0.51|