Last week gave cattle producers something to be thankful for just before Thanksgiving.
After a market-shocking Cattle on Feed report on Nov. 17, last Monday’s markets started what looked like a week-long bloodletting. But after everyone got over their emotional reactions, the markets headed up and ended higher in every category.
By close of trade last Wednesday—all markets were closed Thursday, and most were closed Friday as well—over 76,000 head had been confirmed sold in the negotiated cash fed cattle trade.
Some of that trade occurred on Tuesday at $117-120 live and $188 dressed, a weak steady to the prior week. Most of the week’s trade occurred on Wednesday, however, and prices had improved to $120-121 live and $188-190 dressed.
“The market’s strength indicates that cattle feeders perhaps hold more leverage than realized fully,” noted Cassie Fish of the Beef Report last Tuesday. “Cash could be higher next week as packers procure inventory to fill a couple of more weeks of big kills, as the rib pushes to its top the week of December 4th. If cash is higher next week, then upside follow-through in futures seems a cinch.”
Despite plunging to touch support levels on Monday, near-term live cattle futures surged to recapture lost ground and ended last week in the black. The December contract gained a net 20 cents at Wednesday’s settle of $119.05 compared to Nov. 17’s settle. The February contract similarly gained a net 80 cents with a Wednesday settle of $125.47.
Andrew Gottschalk of Hedgers Edge commented last week that the futures market was “oversold.” The upward movement of the live cattle futures could be seen as a correction on that state.
“Liquidation of some or all of their net long positions pose an ongoing threat to this market,” he cautioned.
Beef cutouts also gained last week, with Choice beef closing Wednesday at $209.01 (+$1.75) and Select closing at $188.64 (+79 cents).
This increase likely stemmed from the short production week last week in the continued face of impressive seasonal demand.
“We would not be surprised to see a post-holiday surge in beef sales,” Gottschalk opined. “Given the trend in employment and wages, any sales slowdown due to higher prices for middle meats should be minimized.”
Feeder cattle
“At this part of the cattle cycle, feeder cattle will follow fed cattle, not lead,” Fish cautioned last Monday.
This proved true for feeder cattle auctions. Those held on Monday and Tuesday, following the chaos caused by surprising Cattle on Feed report and the aftermath in the futures, tended to see the steepest discounting. Those held on Wednesday, after news of Tuesday’s improved live cattle futures and surprisingly resilient cash fed trade had spread, saw steady prices or even some gains.
Medium and large 1-class (#1) steers weighing between 700-800 lbs. remain in a $140-160 range, but lower prices going down into the upper $110s are cropping up in the surveyed auctions. Due to the Thanksgiving holiday last week, fewer auctions were held and many of those that were held had lower offerings volumes.
Colorado: The Winter Livestock auction of La Junta sold far fewer cattle last week ahead of the holiday. Comparable sales were few. Steer calves under 500 lbs. were called $3-5 lower, while 5- and 6-weight steer calves were called down $5-8. Only comparable sales on heifers were for calves under 600 lbs., which were down $3-5. Two lots of #1, 7-weight yearling steers sold at $148-149.
Missouri: The Joplin Regional Stockyards saw almost half again as many more cattle sell last week compared to the week before. Feeder calves were called steady to down $3, while yearlings were $3-6 lower. Both early-week futures and the results of the Cattle on Feed report were credited for this Monday auction’s lower prices. Numerous lots of benchmark steers sold for $148-163, inclusive of calves.
Nebraska: The Loup City Commission didn’t have a sale during the week of Nov. 13-17 so there were no market comparisons in last week’s sale. Demand was called good. Several lots of #1, 7-weight steers sold between $145-154.
New Mexico: The Roswell Livestock Auction was steady in terms of volume, and prices, with a few exceptions. Five-weight steer calves were up $5 and heifers were up $1-4. Benchmark yearling steers ranged narrowly from $140-141, and a small group of five benchmark calves averaged $126.
Oklahoma: The Oklahoma National Stockyards saw its sale volume decline, but over 8,000 head sold is still a significant volume. Feeder steers were called down $2-7 and heifers uneven with a lower undertone. Pee-wee steer calves were up $8-12, while their heifer counterparts were discounted up to $7. Heavier heifer calves were even more severely discounted at $9-13. Benchmark yearling steers averaged in the mid $150s, while a good lot of benchmark calves averaged $146.56.
South Dakota: Compared to the sale it held at the beginning of November, last week’s sale at the Philip Livestock Auction saw feeder steers down $4-8 and heifers steady to down $6 with preference going to lighter animals in both classes. A few calves and fleshy yearlings sold in the #1, 7-weight group at $150-163.50.
Texas: The Amarillo Livestock Auction sold slightly over 800 head last week, down from the week before. Prices were also down with feeders of both sexes and ages selling steady to down $4. A very sparse offering of #1, 7-weight calves sold between $130-135, and three head of heavy, fleshy yearlings averaged $119.
Wyoming: The Riverton Livestock Auction sold fewer cattle last week than the week before. The light offering was credited to the holiday and made for few comparable trades. Feeder steer calves were called steady to down $3. Heifers saw instances of down $3-5, but were weakly traded. Two groups of benchmark steers were sold, with the calf lot averaging $154.47 and the yearling lot averaging $158.
Feeder futures also followed live futures higher last week. By Wednesday afternoon, the near-term contracts had gained a net dollar over their Nov. 17 settles. The January contract settled Wednesday at $152.72 and the March contract settled at $151.15.
DTN’s Analyst, Rick Kment, said Wednesday that the mid-week run-up across the entire market was “helping to spark some additional longer-term interest into the market and potentially setting market lows in nearby contracts.” — Kerry Halladay, WLJ editor
