The big news last week in the cattle and beef markets was actually not new news: Beef demand is amazing.
“It’s a fact that beef demand has been none short of phenomenal this year,” stated Cassie Fish of the Beef Report last week.
“How else do you efficiently plow through the largest beef supply since 2008 without backing up cattle and both cattle and cutout prices higher than the prior year when the annual beef supply was 3 percent less than 2018?”
“Beef demand is currently measuring larger volume being sold at higher prices—as good as it gets. There is, however, an old saying: ‘If it is as good as it gets, then it can only get worse.’” — Andrew Gottschalk, Hedgers Edge
She, and others, pointed out that retailers are featuring beef aggressively, even with ample volumes of competing proteins that are selling cheaper.
“Beef has proven to be the most effective feature to drive store traffic and guarantee a bigger ring at the register.”
“Competition from the competing meats will intensify going forward,” cautioned Andrew Gottschalk of Hedgers Edge. He had other words of warning about the impressive level of beef demand.
“Beef demand is currently measuring larger volume being sold at higher prices—as good as it gets. There is, however, an old saying: ‘If it is as good as it gets, then it can only get worse.’ Thus, a word of caution regarding the current benefit of extremely positive beef demand is in order. Fortunately, at this time we do not see any indicators suggesting a slowdown in beef demand.”
The impressive beef demand isn’t limited to the U.S. either. Recent export reports have shown, as Fish put it, “that the U.S. has become a net exporter of beef again for the first time since 2014.”
Unfortunately, the excitement over beef demand did not translate into timely sales of negotiated cash fed cattle, or rising beef prices. By close of trade on Sept. 13, not even 7,700 head of cash fed cattle had been confirmed sold, averaging $171.45 for dressed cattle and the Choice cutout had fallen to $204.04. The Select cutout did make a week-to-week gain of 15 cents to close at $197.24, but that was down from the intra-week high seen on Monday.
Analysts expected to see a steady to higher cash cattle trade compared to the prior week’s averages of $107.07 live and $170.12 dressed. Conversely, analysts expected cutouts to drift lower, with an initial support level of $202-205 for Choice.
The near-term live cattle futures gained about $1 over the course of the week, settling at $110.80 for October and $115.40 for December. All of that gain was made on Wednesday.
Feeder cattle
Most of the surveyed feeder cattle auctions last week hadn’t seen a sale for a while, due to the Labor Day holiday. Trends were sporadic and there were few comparable sales at a lot of auctions. Overall however, prices on medium and large #1 steers weighing between 700-800 lbs. seemed to solidify around the mid-$150s to lower-$160s.
California: Just over 1,400 head of cattle sold steady last week at the Cattlemen’s Livestock Market in Galt. Benchmark steers sold between $130-156.
Colorado: The La Junta Livestock Commission Company held its first sale in four months, meaning there were no trends to quote on the 2,185 head that sold. Half of that was feeder cattle, and the other half was fairly equally divided between replacement stock and cull stock. A single lot of 34 head of 737-lb. #1 yearling steers sold for $154.
Kansas: Sales volumes more than doubled at the Winter Livestock Auction last week, with 2,625. Mid-weight feeder steers were up $2-4. Heifers were steady to up $2, with preference for lighter heifers. No comparable sales on calves. Benchmark steers sold between $155-163.
Missouri: There were fewer cattle sold last week at the Joplin Regional Stockyards than the most recent sale that happened before Labor Day. Compared to that older sale, steer calves were down $2-5, heifer calves and yearling steers were steady, and yearling heifers were steady to $3. Two lots of #1, 7-weight yearling steers sold between $145-156.
Montana: The Public Auction Yards sold 1,571 head last week, compared to the prior week’s 644 head. As a result of the disperate volumes, there were too few comparative sales for a market trend. Benchmark yearling steers sold narrowly between $155-160.
Nebraska: Sales volumes were up slightly at the Sheridan Livestock Auction last week compared to the prior week. Yearling steers sold up $2-4 while a light offering of 8-weight heifers were called “sharply higher.” Demand was highest for the large strings of yearlings coming off grass. The two lots of #1, 7-weight yearling steers sold narrowly between $157-158.
New Mexico: The sales volume came close to doubling at the Clovis Livestock Auction last week. Despite this, some trends were quoted on light calves, which were generally steady to weak. No comparisons were offered on yearling feeders. Demand was called moderate. Number 1, 7-weight yearling steers sold between $149-155 while calves sold for $131-138.
Oklahoma: Receipts did more than double last week at the OKC West-El Reno sale with 8,891 head sold. Feeder steers were up $3-5 while heifers were up $1-3. Calves were called up $1-3 on limited comparable sales. Benchmark steers sold between $150-160, inclusive of calves.
South Dakota: The Hub City Livestock Auction sold over 3,500 head last week, compared to the 1,422 head from two weeks before. There were few comparisons available. The best test was on 9-weight feeders, with steers called mostly steady and heifers up $5-6. Demand was called good to very good. A single lot of 302 head of #1, 775-lb. yearling steers sold, averaging $159.28.
Wyoming: The Torrington Livestock Commission sold calves $2-5 higher last week, compared to the sale before Labor Day. There were instances of $12 higher on light, pre-conditioned calves. Yearlings were called $3 higher. The few benchmark yearling steers that sold went for $151-160.50.
The near-term feeder cattle futures gained a net $2 over the course of the week for the September contract at $154.97 on Thursday, and about $2.50 for the October contract with $155.40. As with the live cattle futures, the gains came mostly during Wednesday’s trade.
“Cattle futures finally broke out of their sideways trading pattern to the topside. Now all the market has to do is hold onto yesterday’s strong gains,” noted Troy Vetterkind of Vetterkind Cattle Brokerage on Thursday morning.
“If they can I think we can extend December live cattle up to $118-120 and October feeder cattle up to $158-160.” — Kerry Halladay, WLJ editor
