Pressure in outside markets for much of the week weighed on commodity futures prices. Despite stronger wholesale beef prices and higher negotiated cash fed cattle trade, Cattle futures weakened, especially Feeder Cattle on prescient queasiness about the monthly Cattle on Feed report (see below).
Feeder Cattle futures closed an average of $2.06 lower week to week on Friday (37¢ lower at the back to $2.82 lower). That was with Corn futures closing an average of 12¢ lower through the front six contracts, week to week.
Nationwide, calves and feeder cattle sold steady to $2/cwt. lower, according to the Agricultural Marketing Service (AMS).
“Supply was moderate as yearlings become harder and harder to find,” AMS analysts explain. “Demand was moderate to good with health records and the amount of flesh playing a big part in how strong demand was for new-crop calves.”
For instance, in his neck of the woods, Andrew P. Griffith, agricultural economist at the University of Tennessee says preconditioned cattle continue to sell $9-$11/cwt. higher than higher risk cattle.
“It is difficult to know how low prices will go this fall. Unfortunately, prices appear to be coming under more pressure than was previously expected,” Griffith says, in his weekly market comments. “It is prudent for producers to consider their forage resources and the opportunity of weaning calves at least 45 days and providing a complete health program. There is generally value in this type program every year, but the profit prospects may be even greater this year than in most. From the stocker perspective, there is an opportunity to purchase low cost calves and profit on the weight gain.”
Feedlot Placements Up 9%
If anything, the monthly USDA Cattle on Feed report issued Friday (feedlots with 1,000 head or more capacity) will likely be viewed as bearish, with 2.06 million head placed in August, which was 173,000 head more (+9.2%) than a year earlier. That’s about 3% more than expectations heading into the report. In terms of weights, 36% went on feed weighing 699 lbs. or less, 48% weighing 700-899 lbs. and 16% weighing 900 lbs. or more.
Marketings in August of 1.89 million head were 61,000 head fewer (-3.1%) than last year, in line with expectations.
Cattle on feed Sept. 1 of 11.39 million head were 412,000 head more (+3.8%) than a year earlier, which was the most for the date since the data series began in 1996.
Fed Cattle Prices Creep Higher
Negotiated cash fed cattle prices ended the week generally $2 higher on a live basis at mostly $105/cwt. in the five-area feeding region, according to the Agricultural Marketing Service. Dressed trade was $1-$2 higher at mostly $165.
Through Thursday, the five-area direct weighted average steer price was $105.03/cwt. on a live basis, which was $1.49 higher than the previous week. The average steer price in the beef was $164.87, which was $1.94 higher.
“…most casual observers would not consider these prices to be highly profitable because of how low they are relative to recent history. However, current prices have many cattle feeders in triple digit profits, because the cattle coming off feed were purchased at extremely low prices during the spring,” Griffith explains. “These profits will not immediately result in higher feeder cattle prices, as many cattle feeders are looking for some reserves. If these profits persist for a little while, then it will eventually result in support for the feeder cattle market, and that may not show up until winter.”
Except for 22¢ higher in spot Oct, Live Cattle futures closed an average of $1.05 lower week to week on Friday, from 20¢ lower to $1.62 lower.
Cattle slaughter of 2.80 million head in August was 4% less year over year. Beef production of 2.33 billion lbs., was 2% less than a year earlier; there was one more weekday in August last year.
“Steer and heifer slaughter remain well below year ago levels with year-to-date heifer slaughter down 3.7% compared to the same weeks in 2019; steer slaughter is 4.9% below year-ago levels,” Griffith says. “Despite the lower slaughter rates, federally inspected beef production year-to-date is only down 1.2% because carcass weights have been well above last year’s carcass weights since the beginning of the year.”
Estimated total cattle slaughter last week was 651,000 head, according to AMS. That was 6,000 head more than the previous week and 1,000 head more than the same week last year. Year-to-date estimated total cattle slaughter of 23.51 million head is 1.07 million head fewer (-4.3%) than the same period last year.
Choice Boxed Beef Prices Higher
Wholesale beef value appeared to turn the seasonal corner last week.
Choice boxed beef cutout value was $3.70 higher week to week on Friday at $219.34/cwt. Select was $3.04 higher at $206.98.
Estimated year-to-date beef production of 19.81 billion lbs. is 335.5 million lbs. less (-1.69%) than last year.
“Given strong beef production and relatively strong boxed beef prices, it would appear that beef demand remains strong despite many consumers having reduced incomes during the coronavirus pandemic,” Griffith says.
Friday to Friday Change
Weekly Auction Receipts
| Sept. 25 | Auction | Direct |
Video/net |
Total |
|
195,500 (-5,700) |
29,700 (-17,000) |
42,300 (+2,500) |
267,500 (-20,200) |
CME Feeder Index
| CME Feeder Index* | Sept. 24 | Change |
| $142.33 | + $1.14 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Sept. 15 | Change |
| 600-700 lbs. | $152.59 | – $0.37 |
| 700-800 lbs. | $150.08 | + $4.00 |
| 800-900 lbs. | $144.36 | + $1.30 |
South Central
| Steers-Cash | Sept. 25 | Change |
| 500-600 lbs. | $148.03 | – $1.65 |
| 600-700 lbs. | $142.35 | – $1.80 |
| 700-800 lbs. | $141.04 | – $0.34 |
Southeast
| Steers-Cash | Sept. 25 | Change |
| 400-500 lbs. | $149.65 | + $0.31 |
| 500-600 lbs. | $135.10 | – $4.63 |
| 600-700 lbs. | $130.81 | – $0.24 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Sept. 25 ($/cwt) | Change |
| Choice | $219.34 | + $3.70 |
| Select | $206.98 | + $3.04 |
| Ch-Se Spread | $12.36 | + $0.66 |
Futures
| Feeder Cattle | Sept. 25 | Change |
| Oct | $140.325 | – $2.100 |
| Nov | $140.150 | – $2.375 |
| Jan ’21 | $138.525 | – $2.825 |
| Mar | $138.350 | – $2.600 |
| Apr | $139.750 | – $2.325 |
| May | $140.550 | – $1.850 |
| Aug | $145.275 | – $0.375 |
| Sep | $145.275 | n/a |
| Live Cattle | Sept. 25 | Change |
| Oct | $107.575 | + $0.225 |
| Dec | $111.400 | – $0.450 |
| Feb ’21 | $114.600 | – $1.475 |
| Apr | $116.525 | – $1.625 |
| Jun | $110.100 | – $1.500 |
| Aug | $108.550 | – $1.325 |
| Oct | $110.850 | – $1.000 |
| Dec | $114.225 | – $0.825 |
| Oct | $117.175 | – $0.200 |
| Corn | Sept. 25 | Change |
| Dec | $3.652 | – $0.132 |
| Mar ’21 | $3.732 | – $0.142 |
| May | $3.786 | – $0.140 |
| Jly | $3.824 | – $0.130 |
| Sep | $3.786 | – $0.096 |
| Oct | $3.840 | – $0.092 |
| Oil CME-WTI | Sept. 25 | Change |
| Nov | $40.25 | – $1.07 |
| Dec | $40.51 | – $1.10 |
| Jan ’21 | $40.81 | – $1.12 |
| Feb | $41.13 | – $1.11 |
| Mar | $41.45 | – $1.09 |
| Apr | $41.74 | – $1.07 |
Equities
| Equity Indexes | Sept. 25 | Change |
| Dow Industrial Average | 27173.96 | – 483.46 |
| NASDAQ | 10913.56 | + 120.28 |
| S&P 500 | 3298.46 | – 21.01 |
| Dollar (DXY) | 94.58 | + 1.58 |