Fed cattle trade was active last Wednesday and Thursday in the northern
Plains on moderate demand from packer buyers who were still moving heavy
numbers of cattle through plants, despite slipping margins and rumor of
cutbacks. Lackluster beef movement has kept beef cutout levels on the
defensive for the past several weeks and last Thursday was no exception.
During morning trade, Choice boxed beef slipped more than $2, to
$150.51, and Select fell nearly $1, to $144.05. However, at those
levels, there was some sign of renewed buying interest and 363 loads of
fabricated cuts and grind were moved early in the day.
Those factors caused feedlot sellers to come to the table early last
week and accept lower money for showlists. In Nebraska, live sales last
Wednesday were $1-1.50 lower at $91-91.50 and dressed sales came in $2-3
lower at $144-145; in Colorado, live sales were mostly $1-2 lower at
$91.50, with dressed trade $2 lower at $144-145; in the western Corn
Belt, live sales traded 50 cents to $1 lower at $91.50-92 and dressed
sales were reportedly $2-4 lower at $144-145. Trade and demand was light
in Kansas last Wednesday. Dressed sales traded $2-3 lower at $144-145.
Trading was inactive in the Texas Panhandle last Wednesday and not
expected to develop until sometime late in the day last Thursday. The
last established market in the Texas Panhandle live sales traded at $93.
By mid-Thursday last week however, prices were still slipping for live
cattle and the day’s sales were $1-2 behind the previous day.
Slaughter volume for the week was still relatively robust as packers
continued to take advantage of positive margins, which were estimated by
HedgersEdge.com at $6.75 per head. Harvest last Thursday was estimated
by USDA at 128,000 head, even with week ago and year ago numbers. For
the week through last Thursday, packers had slaughtered 507,000 head.
That figure was well above last week’s holiday shortened week-to-date
total of just 386,000 head, but below year ago totals of 509,000 head.
The retail demand for Choice cattle and the seasonal slump in the number
of cattle hitting that quality level has added some support to the
market, however, the temporary loss of the Korean export market hurt
clearance of some end meats like the chuck and forced more product onto
an already heavy supply flowing into the market. There is still some
support from advanced buying for Father’s Day, however, once that is
wrapped up, look for additional weakness in the boxed beef market which,
in turn, will trigger an additional slide in the fed cattle market
toward the coming summer low.
If feedlots fail to reach good clearance levels, the current marketing
state could evaporate quickly, removing one of the few remaining
bargaining chips available for cattle feeders. Competing proteins are
also going to impact the beef market. The poultry industry is increasing
egg sets and pork continues to be very competitive in price. The values
to be found in both those markets are making the competition look very
attractive for consumers, particularly those who are already struggling
with this year’s record-high fuel prices.
The cash market slide last week spilled over into the commodity trading
on the Chicago Mercantile Exchange (CME). Live cattle contracts last
Thursday settled lower on the up front months as a result of the day’s
lower cash trade. June lost 32 points, falling below the $90 mark,
closing at $89.67. Meanwhile, August shed 20 points, closing at $89.52
and October fell 32 points, ending the session at $93.45. Deferred
months were mostly positive at the end of the day last Thursday, with
December moving slightly higher to close at $94.72 and February and
April 2008 tacked on gains, closing at $96 and $96.50 respectively.
In the CME feeder cattle pit last Thursday, contract traders followed
the lead of the live trade lower. Contracts were down across the board
for the day. August lost 92 points, closing at $108.85, while September
fell 70 points, closing at $108.75. October was down 75 points at the
close of business at $108.70 and November lost 72 points, closing at
For the most part, feeder cattle trade appears to be ignoring the wild
weather market swings in corn trade and is trading in a relatively
narrow range ahead of fall contracting. Prices in the past several days
appear to be running at levels near last year as a result of the tight
supply. Herd building in the second half of this year will increase
heifer retention and cut farther into the available supply, meaning that
feedlots will have to come to the table to meet offers from cow/calf
Cash trade in the country last week remained steady with the previous
week. The CME cash index at midweek last week hovered at $107.64, down
slightly from the prior week.
Corn prices through the summer will
continue to fluctuate with the changing weather, however, it seems that
feeder cattle buyers are able to block that influence and have been
staying the course, a trend which appears to be in place for the next
couple of months now that the bulk of the runs have fallen off.
In Oklahoma City, OK, the largest run of cattle reported last week
brought prices mostly steady for cattle over 800 lbs., while those in
the 600-800 lb. range were called steady to $1 lower. The limited supply
of light calves sold steady, while 500-650 lb. stockers were not well
tested, although there was a lower undertone noted. Demand was reported
to be moderate to good for all classes, although the overall kind and
conditions were not as attractive to buyers, with several Brahman
influenced and number two muscled cattle in the mix, along with a number
of cattle being shipped in from outside the area.
In Joplin, MO, compared to two weeks prior, steer and heifer calves sold
steady to $2 lower, while yearlings were steady. Demand was reported to
be moderate on a moderate to heavy supply. A combination of no sale last
week and rain across the four-state area contributed to the heavier
receipts at the sale.
Farther north and west, feeder cattle trends were difficult to call as a
result of the light runs of cattle, however, most markets reported
steady to firm prices on offered lots with strong buyer demand.
Precipitation in the region continues to promote good grass growth and
grass cattle are in high demand. In Billings, MT, feeder cattle
offerings were also very limited again last week, with too few offered
to fully establish the market. Demand remains good for stockers and
In Clovis, NM, last week, feeder steers and heifers sold unevenly
steady, however, the Holstein special sale saw prices for offerings
steady to as much as $3 higher. Trade was called active with good demand
at the sale.
In Salina, UT, feeder steers of mixed weights under 350 lbs. were $8-10
lower. Those in a wide range of 350-550 lbs. were called $1-2 higher,
while weights over 550 lbs. were $2-3 higher. Feeder heifers were mixed
but mostly weak to $1 lower, with some instances of $3 lower, while
Holstein steers were weak to $1 lower.