Continued weakness in wholesale beef values, increasing demand uncertainty and recently resurgent grain prices weighed on cash and futures cattle prices.
Nationwide, steers and heifers sold steady to $3/cwt. lower, according to the Agricultural Marketing Service (AMS) with the strongest demand for remaining yearlings.
“Demand for calves continues to be very dependent upon the health program of the originating producer,” say AMS analysts. “The week ended with much cooler temperatures as an Arctic blast brought frost to a good portion of the Plains. Lack of moisture continues to avoid the areas that need it the most and the drought areas are slowing intensifying each week.”
“Feedlots are navigating a tough stretch as it relates to markets and cattle movement. From the market standpoint, cattle feeders are experiencing strong margins, but they need to move cattle to make pen space for some of the high-risk cattle that make their way to the feedlot this time of year,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “With fairly inexpensive calves available, feedlot managers would like to capitalize on the strong margins that are available now and place some cattle on feed that have a strong probability of being profitable moving into the second quarter of 2021. These are both good problems, but they still have to be navigated.”
Feeder Cattle futures closed an average of $2.98 lower week to week on Friday, from 15¢ lower in spot Oct to $4.67 lower. That makes for an average of $6.35 lower during the past two weeks.
Although prices for 4-weight and 5-weight cattle remains comparable to the spring, Stephen Koontz, agricultural economist at Colorado State University says, “Basis for these lightweight animals is soft and the market is rather clearly communicating, for producers who can feed calves for another month or two, that delaying marketing should be considered.”
In a recent issue of In the Cattle Markets, Koontz also explains, “The COVID impacts on the fed cattle market continue to almost have entirely run their course. Marketings have been reasonably strong. The number of long-fed cattle are down off their peaks in June and high inventories in the surrounding months of May and July.”
Fed Cattle Prices Stall
For the week, prices were $1 lower on a live basis in the Southern Plains at $108/cwt.; steady to $1 lower in Nebraska at $107-$108/cwt.; steady to $3 lower in the western Corn Belt at $105-$107. Dressed prices were $1 lower in Nebraska at $169 and $1-$3 lower in the western Corn Belt at $167-$168.
Live Cattle futures closed an average of $2.26 lower week to week on Friday ($1.22 lower at the back to $3.97 lower toward the front). Live Cattle open interest declined by 13,712 contracts week to week on Thursday.
Estimated total cattle slaughter for the week ending Oct. 17 was 654,000 head, according to USDA. That was 17,000 more than the previous week and 11,000 head (+1.71%) more than the same week last year. Year-to-date estimated total cattle slaughter is 25.47 million head, which would be 1.04 million head fewer (-3.92%) than the same time last year. Estimated total beef production so far this year is 21.12 billion lbs., which would be 272.6 million lbs. less (-1.27%) than the same time last year.
Meanwhile, actual total cattle slaughter for the week ending Oct. 3 of 663,777 head was 19,101 head more (+2.96%) than the same week last year. Total fed steer and heifer slaughter under federal inspection of 524,544 head was 20,836 head more (+4.14%) than the prior year. The average dressed steer weight for the week was 924 lbs., which was the same as a week earlier but 25 lbs. heavier than a year earlier. The average dressed heifer weight of 843 lbs. was 5 lbs. heavier than the prior week and 19 lbs. heavier than last year.
Net U.S. beef export sales for 2020 totaled 13,400 metric tons the week ending Oct. 8, according to the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service. That was 35% less than the previous week and 34% less than the previous four-week average. Increases were primarily for Japan, Mexico, South Korea, Taiwan and Canada. Net beef export sales for 2021 were 5% less than the previous week and 1% less than the prior four-week average.
Beef Prices Step Lower
Wholesale beef prices continue lower, under seasonal pressure, as well as growing uncertainty about the potential impact of resurgent COVID cases.
Choice boxed beef cutout value was $4.03 lower week to week on Friday at $210.03/cwt. Select was $6.30 lower at $193.52. Over the last two weeks, Choice is $8.85 lower and Select is down $14.09.
“As packers and retailers look forward to holiday beef sales, most have tempered expectations,” Griffith says. “It is difficult to know at this time if consumers will open their wallets to pay for high valued cuts of beef for the holiday gatherings or if those gatherings will even occur in many instances. Many businesses and organizations have already canceled their holiday celebrations which means restaurants and food service continue to miss out on opportunities. This hits the beef industry hard as many of these gatherings include beef as the main course. It will be interesting to see if and how beef moves through the end of the year holidays and if families decide to forego beef as the centerpiece of this year’s meal. If beef movement is not strong, then the signal will be sent down the line with lower prices.”
Friday to Friday Change
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||Oct. 15||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$151.73||– $0.83|
|700-800 lbs.||$145.20||– $3.12|
|800-900 lbs.||$142.99||– $1.71|
|500-600 lbs.||$144.07||– $2.53|
|600-700 lbs.||$139.10||– $3.40|
|700-800 lbs.||$139.01||– $2.35|
|400-500 lbs.||$145.13||– $1.00|
|500-600 lbs.||$134.60||– $2.27|
|600-700 lbs.||$131.44||+ $1.23|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Oct. 16 ($/cwt)||Change|
|Ch-Se Spread||$16.51||+ $2.27|
|Feeder Cattle||Oct. 16||Change|
|Jan ’21||$129.325||– $4.675|
|Live Cattle||Oct. 16||Change|
|Feb ’21||$111.475||– $2.825|
|Feb ’22||$114.275||– $1.225|
|Mar ’21||$4.070||+ $0.048|
|Oil CME-WTI||Oct. 16||Change|
|Jan ’21||$41.42||+ $0.15|
|Equity Indexes||Oct. 16||Change|
|Dow Industrial Average||28606.31||+ 19.41|
|S&P 500||3483.81||+ 6.68|
|Dollar (DXY)||93.72||+ 6.68|