—Late week fed cattle trade expected steady to lower.
Fed cattle trade was once again a late week affair last week, with very
little trade occurring in the major cattle feeding areas. Analysts last
week said they expected trade steady to weaker than the prior week’s
level. The last established market was Oct. 26, with live cattle trading
in a range of $92-93.50, with the exception of Iowa/Minnesota, where
live sales traded from $90-91. Prior week dressed sales in the northern
tier ranged from $139-143. Dressed sales in Kansas sold at $146.50.
The current drive for packers to obtain fed cattle at any cost to keep
them away from competitors, despite substantial negative margins,
continues to define the fed cattle markets. That heavy slaughter volume
was preventing packers from being able to push the cutout values higher
last week and Choice boxed beef dropped below the $140 level last week,
slipping $1.21 last Thursday to $139.46 at mid-day. Select was also
lower, losing 23 cents to trade at $127.92.
There was little reduction in slaughter levels last week, with the
week-to-date total through Thursday last week running 6,000 head above
the year ago levels at 514,000 head, although packers were able to draw
off supplies of contract cattle.
In fact, according to Ehedger.com analyst Troy Vetterkind, one major
packer last week was drawing on supplies of Canadian fed cattle to fill
supply chains. He said that same packer would be dark Friday and
Saturday last week for routine maintenance functions, limiting their
harvest for the week.
“The beef market continues to stumble and packers can draw from November
contract cattle this week, so all of this combined will keep them less
aggressive in the cash market this week, despite smaller showlists in
most major feeding areas,” Vetterkind said. “It’s not to say that cattle
feeders don’t have any bargaining power this week, as most feed yards
remain fairly current and numbers should stay manageable for another
couple of weeks.”
He said the focus last week would be on the performance of the new
December contract on the Chicago Mercantile Exchange.
“I think there could be some more downside, however, I would really want
to see the December contract hold the $94 level in order to keep both
cash and futures markets stable,” Vetterkind said.
The cow beef markets last week continued to be a bright spot in the
cattle markets. The cow beef cutout last Thursday was trading at
$103.64, while the 90 percent lean sold at $122.64 and 50 percent trim,
Cash prices paid for feeder cattle were mixed this week, with weather
and corn prices causing different price trends in different areas. The
undertone of the market continues to be one of strong prices feeding off
of low supply, as feedlots continue to work hard to fill pens even
though the number of steers and heifers available to put on feed is low.
Stephen R. Koontz, professor of Agricultural Marketing at Colorado State
University, said that this year marks a place in the marketing cycle
where demand for feeder cattle is high, almost no matter what the
“This is the interesting part of the cycle where the meat side of the
industry has to compete with the cow herd side,” says Koontz. “The
packers and feed yards are looking pretty hard for cattle to go to
slaughter but, unfortunately for them, cow/calf operators are looking
for replacements and retained ownership,” Koontz said.
Koontz explained that although margins are tight for feed yards right
now, they will continue to try and fill pen space as they look ahead at
“It’s going to continue to be pretty tough for feed yard managers to
look at a budget and say it’s going to work, but with a pen-full
mentality, I think most feedlots will try and stay as full as possible
and look forward to what might be some pretty attractive fed cattle
prices next year,” said Koontz.
According to Koontz, the future continues to look bright for cow/calf
operations for as long as the U.S. herd size remains small.
“This is a trend which looks to be pretty favorable for cow/calf and
stocker operators while the cow herd stays under the level it needs to
be. The people who will get burned are the ones who look at owning the
cattle while they’re on feed. They won’t be tough to market, but the
price of feed isn’t going to go down considerably for awhile,” Koontz
In Oklahoma City, OK, last week, feeder cattle were $1-2 lower following
a steady to $2 higher trend on sale morning. Steer calves were $1-2
higher, with heifer calves steady to $2 higher. Demand for feeders was
moderated as corn prices continued to climb higher. Demand was good for
calves, and especially good for steers.
In Joplin, MO, there were 6,000 head offered for sale last week, with
steers and heifers under 600 lbs. steady to $2 lower, with weights over
600 lbs. $1-3 lower. Demand and supply was moderate with the calf trade
opening lower, but gaining momentum as the day went along. The yearling
trade was lower as buyers are working against a lower fed cattle market
and higher corn prices. A noticeably higher percentage of yearlings and
wean-vac calves were offered compared to the previous sale. A group of
steers weighing an average of 626 lbs. brought $113.71 on this sale day,
while heifers weighing 635 lbs. brought $102.17.
At Faith Livestock Commission’s sale in Faith, SD, there were 5,534 head
sold last week, with steer calves under 700 lbs. selling steady to $2
lower. Heifer calves under 600 lbs. sold fully $2 lower. A fancy 600 lb.
steer was good for $126 at the Monday sale, while a group of fancy 561
lb. heifers were bringing $118.
At last week’s sale at the Stockland Livestock Auction in Davenport, WA,
the 1,617 head offered sold steady to $2 higher, yearlings were not well
tested. Trade was moderate to active with moderate to good demand, with
a group of steer calves weighing an average of 628 lbs. going for $95.84
at this sale.
At Western Stockman’s Market in Famoso, CA, prices were $2 lower on
feeder cattle and $5 lower on the stockers out of the 2,229 cattle
available at the Monday sale. Good demand was exhibited for the feeders,
especially quality 700-800 lb. steers and heifers. — WLJ