— Moisture still helping calf market.
— Feeder cattle losing ground.
A Thursday rally in the live cattle futures market kept last week’s fed
cattle trade at a stalemate as prospective sellers had more impetus to
hold on for at least steady money, compared to the previous week.
However, analysts weren’t sure packers would ante up that much, as
processing margins continued to go deeper into the red last week.
As of press time last Thursday, the only trade for the week was an
anemic 13,000 head in Nebraska at mostly $137-137.50 dressed. Other
northern cattle feeders were waiting for packers to bid $139 and
prospective sellers in more southern feeding areas were asking mostly
$89. Packer bids in the south were hovering around $85 live.
Packer margins continued to be on the negative side of the ledger last
week. In fact, several days last week showed packers losing up to $60
per head, and prospects weren’t looking to improve anytime soon.
Boxed beef markets continued to struggle last week. As of midday
Thursday, Choice beef was leaving processors’ warehouses at $139.28,
while Select was selling for $136.21 per cwt. Choice lost about $2.50
off the previous week’s high, while Select lost a little over $3 in
value over the same period of time.
Boxed beef movement was called moderate at best for the previous two
weeks, with only one day showing over 600 total loads moved via the cash
market. Several market analysts said consumers in the eastern half of
the country are still trying to get through the winter doldrums, and
that it could be another couple of weeks before they start to kick into
grilling mode and start demanding beef, especially higher-quality middle
Packer demand for live cattle was also said to be waning due to
slaughter volumes exceeding weekly beef demand. For the week ending Feb.
19, USDA reported 576,000 cattle processed, 10-15,000 head more than
what analysts said needed to be processed to meet current weekly beef
demand. Most analysts said 560-565,000 head of cattle would meet current
weekly demand rates. Through last Thursday, 451,000 head of cattle were
processed, according to USDA, putting packers on pace to process around
550,000 head of cattle.
“They just don’t need many cattle right now,” said Reed Marquotte,
analyst with M&Z Livestock Analytics. “Demand is anemic, beef movement
is very slow and weather still remains very wintery across the country.
One or more of those things have to change before packer demand for
cattle picks up.”
The only glimmer of optimism for cattle feeders last week was Thursday’s
10-30 point rally in live cattle futures. However, analysts even said
that wouldn’t be enough to probably rally the cash market because most
packer buyers based procurement decisions on the April contract.
“February is basically an expired contract, and packers will try to
convince feedlots that they need to base their marketing tactics on
April, which is currently under $87,” Marquotte said.
“The other indicators aren’t there to justify holding out for much more
than that, unfortunately.”
The most positive U.S. cattle market news was coming out of stocker
cattle and calf circles last week as spring grazing forecasts continue
to improve and alternative feed resources remain much cheaper than
normal. Calf prices nationwide ranged between mostly steady to $3 higher
last week, with most auction barns reporting strong demand and very
Rain and snow continues to inundate southern and Far West grazing areas
and that continues to improve pasture and rangeland conditions and
extend the outlook for the length of the 2005 grazing season.
In addition, old crop corn continues to be available to a majority of
areas at around $3 per cwt, making it possible for stocker operators to
purchase cattle a little earlier than normal and putting them on a
little hotter feed ration before being turned out to grass or other
pastures. Other feedgrains, specifically milo, barley and feed wheat,
are also very cheap and some operators are utilizing them in tandem with
There were several auction barns, particularly in the Southwest and
southern Plains, last week reporting some instances of four-weight
steers getting back into the $145-150 per cwt range. In addition, higher
quality heifers, specifically those called “more replacement heifer
quality,” were bringing a $5-8 premium to their “commodity quality”
counterparts, auction sources said.
Yearlings and heavier replacement-ready calves were struggling last week
as cattle feeding profits are still non-existent and there is still some
possible pressure coming from Canadian feeder cattle entering the U.S.
beginning in March.
Feedlot order buyers were seen paying $2-3 less than the previous few
In addition to cattle feeders reporting losses on most cattle marketed
during the past few weeks, pen conditions continue to be muddy, which is
lessening the desire to bring in cattle to put on full feed.
The CME feeder index, for 700- to 850-pound steers, was at $101.61 last
Wednesday, compared to $103.89 the previous Wednesday.