Buyer demand remained strong for yearlings, while colder than normal temperatures in some areas of the county, along with snow and wet conditions, limited demand for un-weaned calves, according to the Agricultural Marketing Service (AMS).
“Potential health risks have kept most buyers at bay for calves. However, preconditioned long-time weaned calves did attract much more of the buyer’s attention, creating wide price spreads,” say AMS analysts. “Moreover, with harvest now in full swing, some farmer feeders are focusing on getting crops out rather than placing calves. With most feedlots at or near full capacity throughout most feeding regions, placing cattle has become challenging as empty pens are already spoken for or getting much needed maintenance work completed.”
Overall, AMS pegged the price trend for yearling steers and heifers at $3/cwt. lower to $1 higher. Steer and heifer calves sold $1-$3 lower.
“Prices for freshly weaned calves may suffer the next several weeks if the total number of head being marketed remains elevated,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The large swings in temperature this time of year result in high-risk cattle if they have not been weaned and vaccinated. The increased risk of morbidity and mortality force cattle buyers to lower their bids to account for the additional veterinary cost and death loss.”
Feeder Cattle futures closed $2.16 higher week to week on Friday, supported by increasing strength in cash fed cattle prices and Live Cattle futures.
Fed Cattle Prices Firm to Higher
Except for the Southern Plains, negotiated cash fed cattle trade remained undeveloped through Friday afternoon, based on USDA reports. Live sales in the Southern Plains on Thursday were at $110/cwt., which was $1 higher in Kansas and $2 higher in the Texas Panhandle.
“Negotiated cash fed trade in the Southern Plains provided a psychological victory for cattle feeders with the bulk of sales reported at $110, the highest since the early-August plant fire,” say AMS analysts. “The trend of pursuing high-grading cattle continued throughout all feeding regions with higher live prices reported as the week progressed.”
Live Cattle futures closed an average of $1.70 higher week to week on Friday ($1.40 to $2.45 higher).
“The finished cattle market is attempting to break through price resistance at $110. If there is any follow through next week then it is likely the fed cattle market will officially be out of its fall slump and heading toward better days,” Griffith says. “Live Cattle futures for October traded over $111 on Friday while the December contract traded over $115. The December contract will become the nearby contract next week, which means the market may see some jockeying in the December contract to close some of the $4 gap that currently exists. The better news is the February Live Cattle contract which is trading over $120.”
Seasonally increasing wholesale beef values continued to provide underlying support. Choice boxed beef cutout value was $7.40 higher week to week on Friday at $225.44/cwt. Select was $6.80 higher at $199.84. Over the last two weeks, Choice is up $9.88 and Select is $11.16 higher.
Griffith notes beef cow slaughter is 2.3% more than last year for January through September at 2.30 million head.
“It is difficult to say if these slaughter levels will actually result in reduced beef cowherd size when the Jan. 1 inventory report is released, but these slaughter levels have supported beef production in 2019,” Griffith says. “Despite strong beef production, prices continue to find support due to domestic demand and international demand. This will only be further supported if a deal with China is established.”
Derrell Peel, Extension livestock marketing specialist at Oklahoma State University points out African Swine Fever (AFS) in China is projected to reduce total global beef, pork and poultry production 1.5% this year, compared to 2018 and another 2.4% next year.
“At the same time, global meat exports are expected to increase 6.9% in 2019 compared to 2018 and to grow another 6.1% in 2020,” Peel explains, in his weekly market comments. “As a result, global meat exports are projected to expand from 11.2% of total production to 13.2% in just two years. ASF is not controlled in most countries where it is currently active; it is difficult to eradicate and restocking is usually unsuccessful if the disease is not completely controlled. The rebuilding of the global pork industry is not a matter of months but will take years. It is clear that ASF will have very significant impacts on global protein markets for the foreseeable future.”
Friday to Friday Change*
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||Oct. 24||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$150.04||– $1.41|
|700-800 lbs.||$147.98||– $1.35|
|800-900 lbs.||$146.79||– $0.05|
|500-600 lbs.||$148.12||– $1.06|
|600-700 lbs.||$144.23||– $2.36|
|700-800 lbs.||$144.80||– $2.90|
|400-500 lbs.||$139.58||– $0.67|
|500-600 lbs.||$133.67||+ $0.69|
|600-700 lbs.||$128.98||– $2.22|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Oct. 25 ($/cwt)||Change|
|Ch-Se Spread||$25.60||+ $0.60|
|Feeder Cattle||Oct. 25||Change|
|Jan ’20||$141.600||+ $2.150|
|Live Cattle||Oct. 25||Change|
|Corn futures||Oct. 25||Change|
|Mar ’20||$3.974||– $0.052|
|Oil CME-WTI||Oct. 25||Change|
|Jan ’20||$56.71||+ $2.89|
|Equity Indexes||Oct. 25||Change|
|Dow Industrial Average||26958.06||+ 187.25|
|S&P 500||3022.55||+ 36.38|
|Dollar (DXY)||97.83||+ 0.69|