Softer cash fed cattle prices, seasonally weakening wholesale beef values and a break in equity markets later in the week all added bearishness to Cattle futures for most of the week. Calves and feeder cattle traded mixed but followed suit overall.
Steers and heifers sold $1-$5/cwt. lower, according to the Agricultural Marketing Service (AMS).
Except for $1.55 higher in Aug, Feeder Cattle futures closed an average of $1.05 lower week to week on Friday (40¢ lower at the back to $2.37 lower in spot Sep).
“It is evident the calf and feeder cattle market has softened the past couple of weeks which seems rather early,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The summer feeder cattle market generally holds strength into the middle of September while the calf market does not begin to come under severe pressure until October. However, factors beyond the control of cattle producers are putting pressure on the market.”
Drought is part of the story. Griffith points out some form of drought covers more than 85% of the Western United States; severe drought or worse over 50% of the region. Similarly, he says drought covers 77% of the High Plains; severe or worse in 31% of the region.
“The dry conditions led to many producers marketing calves early this year, whether that be from summer grazing programs or having to wean calves early,” Griffith explains. “The evidence of these animals moving early was seen in the August cattle on feed report. July placements were up 11% compared to last year with most of that increase coming from the lighter weight categories.”
Recently updated five-year price projections from the Food and Agricultural Policy Institute (FAPRI) at the University of Missouri peg feeder steer prices (600-650 lbs., Oklahoma City) for this year at $144.46/cwt., $150.54 next year and rising to $179.03 in 2025.
Fed Cattle Prices Droop
Negotiated cash fed cattle prices were $2-$3 less than the previous week in the Southern Plains and Nebraska at $102-$103/cwt. Live trade was steady to $3 lower in the western Corn Belt at $103-$104. Dressed sales were $3-$5 lower at $162-$164.
Through Thursday, the average five-area direct weighted average fed steer price was $103.18/cwt. on a live basis, which was $1.94 less than the previous week. The average dressed steer price of $163.11 was $3.41 less than the previous week.
“Late summer and early fall are consistently a tough time period for cattle exiting the feedlot, as beef demand softens and so does demand for finished cattle,” Griffith says. “This soft demand will persist for several weeks, but it is hard to imagine cattle prices re-testing the lows they have already experienced earlier in the summer. The one thing that should support finished cattle prices is the hole that was created by reduced placements into feedlots during March and April. Many of the animals that would have been placed in March and April would be coming off feed now, but the delay in placing those cattle should result in fewer cattle being marketed the next several weeks.”
Live Cattle futures closed mixed, from an average of 26¢ lower to an average of 68¢ higher week to week on Friday.
Estimated cattle slaughter for the week ending Sept. 5 was 633,000 head, which was 21,000 head fewer than the previous week but 62,000 head more than the same week a year earlier. Beef production for the week of 527.3 million lbs. was 17.3 million lbs. less than the previous week.
FAPRI projects the five-area direct average fed steer price at $113.15/cwt. next year, compared to an estimated $109.84 this year. After 2021, projected prices increase steadily from $119.94 in 2022 to $130.91 in 2025.
Year to date, estimated total cattle slaughter of 21.63 million head is 998,000 head fewer (-4.4%) than the same time last year. Beef production year to date of 17.89 billion lbs. is 320.6 million lbs. less (-1.8%) than the same time last year.
Wholesale Beef Values Decline
Choice boxed beef cutout value was $3.55 lower week to week on Friday at $225.85/cwt. Select was $5.56 lower at $209.30.
“Given that Labor Day purchases are behind the market, wholesale beef prices are remaining fairly strong,” Griffith says. “The lower fed cattle prices and the strong boxed beef prices are continuing to offer strong margins for packers who still hold most of the leverage in the marketplace. The expectation is for beef prices to start softening as summer ends and fall begins, but that has not been the case thus far.”
According to Griffith, loin and rib prices continue on par with a year a year earlier, as do prices for most end cuts.
“The trim market is the one running into some weakness, as 50% lean beef is down more than 50% compared to year-ago prices,” Griffith says. “This is somewhat surprising, given that the ground beef market has been on a tear through the pandemic and that 90% lean beef is at year-ago price levels. The expectation is for beef to soften moving through September and October, but softening prices will not take all the profits out of the business.”
Friday to Friday Change
Weekly Auction Receipts
| Sept. 4 | Auction | Direct |
Video/net |
Total |
|
160,800 (+4,600) |
27,900 (-10,800) |
5,200 (-275,100) |
193,900 (-281,300) |
CME Feeder Index
| CME Feeder Index* | Sept. 3 | Change |
| $140.20 | – $1.36 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Sept. 4 | Change |
| 600-700 lbs. | $153.24 | – $5.32 |
| 700-800 lbs. | $147.27 | + $0.28 |
| 800-900 lbs. | $141.68 | – $1.12 |
South Central
| Steers-Cash | Sept. 4 | Change |
| 500-600 lbs. | $150.91 | – $2.89 |
| 600-700 lbs. | $146.42 | – $5.64 |
| 700-800 lbs. | $139.70 | – $0.78 |
Southeast
| Steers-Cash | Sept. 4 | Change |
| 400-500 lbs. | $148.77 | – $1.46 |
| 500-600 lbs. | $137.60 | – $4.17 |
| 600-700 lbs. | $131.22 | – $2.88 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Sept. 4 ($/cwt) | Change |
| Choice | $225.85 | – $3.55 |
| Select | $209.30 | – $5.56 |
| Ch-Se Spread | $16.55 | + $2.01 |
Futures
| Feeder Cattle | Sept. 4 | Change |
| Sep | $137.650 | – $2.375 |
| Oct | $138.500 | – $1.675 |
| Nov | $139.525 | – $1.075 |
| Jan ’21 | $138.075 | – $0.575 |
| Mar | $137.725 | – $0.500 |
| Apr | $138.975 | – $0.400 |
| May | $139.400 | – $0.725 |
| Aug | $143.150 | + $1.550 |
| Live Cattle | Sept. 4 | Change |
| Oct | $104.450 | – $0.450 |
| Dec | $108.475 | – $0.025 |
| Feb ’21 | $112.450 | + $0.600 |
| Apr | $115.125 | + $1.025 |
| Jun | $108.450 | + $0.700 |
| Aug | $106.925 | + $0.400 |
| Oct | $109.000 | -0- |
| Dec | $112.600 | – $0.300 |
| Oct | $115.250 | n/a |
| Corn | Sept. 4 | Change |
| Sep | $3.472 | + $0.012 |
| Dec | $3.580 | – $0.012 |
| Mar ’21 | $3.684 | – $0.008 |
| May | $3.746 | – $0.010 |
| Jly | $3.792 | – $0.002 |
| Sep | $3.772 | + $0.002 |
| Oil CME-WTI | Sept. 4 | Change |
| Oct | $39.77 | – $3.20 |
| Nov | $40.15 | – $3.14 |
| Dec | $40.59 | – $3.03 |
| Jan ’21 | $41.02 | – $2.92 |
| Feb | $41.44 | – $2.80 |
| Mar | $41.83 | – $2.68 |
Equities
| Equity Indexes | Sept. 4 | Change |
| Dow Industrial Average | 28133.31 | – 520.56 |
| NASDAQ | 11313.13 | – 382.50 |
| S&P 500 | 3426.96 | – 81.05 |
| Dollar (DXY) | 92.97 | + 0.67 |