Cattle futures took the previous week’s bearish monthly Cattle on Feed report to start the week but then received another round of pressure from the crop-friendly quarterly Grain Stocks report.
Feeder Cattle futures took the brunt, along with cash prices, to a point, while stronger cash fed cattle prices provided underpinning.
Nationwide, steers and heifers sold from $2/cwt. lower to $2 higher, according to the Agricultural Marketing Service (AMS).
“Demand remains good for yearling cattle, with light to moderate demand for fresh calves,” say AMS analysts. “Bawling and un-weaned calves continue to see discounts and are much less desirable to buyers as is typical for this time of year. Buyers are quite willing to pay premiums for cattle if producers invest time in them and provide a documented health program.”
Feeder Cattle futures closed an average of 72¢ lower week to week on Friday, with much of the pressure coming from higher grain prices.
Old crop corn stocks in all positions on Sept. 1 of 2.00 billion bu., were 10% less than a year earlier and significantly less than the trade expected, according to the aforementioned grain stocks report.
Week to week on Friday, Corn futures closed an average of 13¢ higher through the front six contracts.
Similarly, old crop soybeans stored in all positions were 42% less than a year earlier at 523 million bu., significantly less than the trade expected.
Week to week on Friday, Soybean futures closed an average of 18¢ higher through the front six contracts.
“As we work through 2020 and into 2021, feeder cattle supplies should continue to tighten modestly,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. In his weekly market comments, Peel pointed out total feedlots placements are 4.2% less than last year for the year to date, despite significant increases the last two months.
Fed Cattle Prices Gain
For the week, live sales in the Southern Plains were mostly $2 higher at $107/cwt., with a few up to $108 in the Texas Panhandle. Live prices were $2 higher in Nebraska at $107 and $2-$3 higher in the western Corn Belt at $107-$108. Dressed trade was $2-$3 higher at $167-$168.
Through Thursday, the average five-area direct steer price was $107.11/cwt. on a live basis, which was $2.08 higher than the previous week. The average price in the beef was $2.81 higher at $167.68.
Except for an average of 39¢ lower in two contracts, Live Cattle futures closed an average of 48¢ higher week to week on Friday.
“This week’s prices are still a long way from the fourth quarter target high between $115 and $120, but a $7 to $8 price improvement over the next two months is obtainable,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Reaching the afore-mentioned price target for a fourth quarter apex will likely result in strong competition for feeder cattle moving forward.”
In the meantime, Peel explains, “The July-August bulge in placements suggests higher feedlot marketings in the first quarter of 2021. July placements were skewed to the lighter weight cattle, while August placements included more heavyweight placements, which further implies that cattle could be somewhat bunched up. However, winter weather typically spreads cattle out a bit, so the exact timing is uncertain. The ripples from the first half of 2020 will extend into early 2021.”
Wholesale beef values hovered on either side of steady. Choice boxed beef cutout value was 46¢ lower week to week on Friday at $218.88/cwt. Select was 63¢ higher at $207.61.
The average dressed steer weight for the week ending Sept. 19 was 919 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. Although 23 lbs. heavier than the previous year, the average weight was 1 lb. lighter than the previous week. That was the first week-to-week decline since mid July, according to AMS.
The actual dressed heifer weight of 836 lbs. was the same as a week earlier, but 13 lbs. heaver than the same week last year.
“Boxed beef prices were in a holding pattern this week…This is fairly typical of the early fall beef market, and this pattern may persist for a few weeks,” Griffith says. “There are several factors that may influence the beef market moving through the last quarter of the year. The first would be more stimulus money being deposited in the bank accounts of American consumers. If Congress passes another substantial stimulus package, then this could result in more beef purchases as discretionary income inevitably increases… A second major factor will continue to be the export market.”
Friday to Friday Change
Weekly Auction Receipts
| Oct. 2 | Auction | Direct |
Video/net |
Total |
|
207,200 (+11,700) |
39,700 (+10,000) |
4,500 (-37,800) |
251,400 (-16,100) |
CME Feeder Index
| CME Feeder Index* | Oct. 1 | Change |
| $142.96 | + $0.73 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Oct. 2 | Change |
| 600-700 lbs. | $154.59 | + $2.00 |
| 700-800 lbs. | $149.49 | – $0.59 |
| 800-900 lbs. | $145.06 | + $0.70 |
South Central
| Steers-Cash | Oct. 2 | Change |
| 500-600 lbs. | $147.81 | – $0.22 |
| 600-700 lbs. | $143.18 | + $0.83 |
| 700-800 lbs. | $142.24 | + $1.20 |
Southeast
| Steers-Cash | Oct. 2 | Change |
| 400-500 lbs. | $148.90 | – $0.75 |
| 500-600 lbs. | $136.40 | + $1.30 |
| 600-700 lbs. | $129.48 | – $1.33 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Oct. 2 ($/cwt) | Change |
| Choice | $218.88 | – $0.46 |
| Select | $207.61 | + $0.63 |
| Ch-Se Spread | $11.27 | – $1.09 |
Futures
| Feeder Cattle | Oct. 2 | Change |
| Oct | $139.900 | – $0.425 |
| Nov | $139.875 | – $0.275 |
| Jan ’21 | $138.000 | – $0.825 |
| Mar | $137.425 | – $0.925 |
| Apr | $138.900 | – $0.850 |
| May | $139.925 | – $0.625 |
| Aug | $144.350 | – $0.925 |
| Sep | $144.350 | – $0.925 |
| Live Cattle | Oct. 2 | Change |
| Oct | $108.175 | + $0.600 |
| Dec | $111.100 | – $0.300 |
| Feb ’21 | $114.725 | + $0.125 |
| Apr | $117.150 | + $0.625 |
| Jun | $110.725 | + $0.625 |
| Aug | $109.200 | + $0.650 |
| Oct | $111.400 | + $0.550 |
| Dec | $114.400 | + $0.175 |
| Feb ’22 | $116.700 | – $0.475 |
| Corn | Oct. 2 | Change |
| Dec | $3.796 | + $0.144 |
| Mar ’21 | $3.892 | + $0.160 |
| May | $3.946 | + $0.160 |
| Jly | $3.984 | + $0.160 |
| Sep | $3.882 | + $0.096 |
| Oct | $3.910 | + $0.070 |
| Oil CME-WTI | Oct. 2 | Change |
| Nov | $37.05 | – $3.20 |
| Dec | $37.34 | – $3.17 |
| Jan ’21 | $37.74 | – $3.07 |
| Feb | $38.15 | – $2.98 |
| Mar | $38.55 | – $2.90 |
| Apr | $38.92 | – $2.82 |
Equities
| Equity Indexes | Oct. 2 | Change |
| Dow Industrial Average | 27682.81 | + 508.85 |
| NASDAQ | 11075.02 | + 161.46 |
| S&P 500 | 3348.44 | + 49.98 |
| Dollar (DXY) | 93.81 | – 0.77 |