The cash fed cattle and beef markets were dithering last week. On the cutout side, Choice spent the week yo-yoing between gains and losses. On the cash fed cattle side, very few cattle had sold by the end of the week, compared to recent weeks when over 100,000 head had been sold.
By the afternoon slaughter cattle report on Thursday, May 24, only 4,441 head of negotiated cash fed cattle had been confirmed sold for the whole week. Though the volume was insufficient to establish a trend, the bulk of that trade happened on Thursday at $176-182 (average $180.28) dressed. This was about $2.50 higher than the prior week’s dressed average.
Analysts expected cash fed prices would be challenged to be steady last week. Given the low volume that had traded by Thursday, there was plenty of time left for that to happen. Trade likely turned on the outcome of the monthly Cattle on Feed report, released Friday. Pre-report estimates predicted on-feed populations up 5 percent, placements down 9 percent, and marketings up 6 percent compared to May 1, 2017.
Troy Vetterkind, of Vetterkind Cattle Brokerage, said it would be friendly if the report comes out this way, “But much of it is likely already priced into the market.”
By Thursday’s settlement, the near-term live cattle futures had gained a net $2-3 over the course of the week. The June contract settled at $104.40 and the August live contract settled at $101.77.
The cutouts lost $3-4 over the course of the week with the Choice cutout closing on Thursday at $229.00. The Select cutout closed at $204.93.
“Product is set for a freefall with initial support at $210 followed by $198-200 for Choice beef,” commented Andrew Gottschalk at Hedgers Edge. However, demand and retail featuring may soften the landing.
“Choice strip ads are breaking in Denver at $4.77 and Choice T-bones at $5.47. Ground beef is also getting additional ad space. Improved beef and meat demand should continue throughout the summer acting as a buffer to limit the summer/fall low.”
Feeder cattle
Many feeder cattle auctions were closed ahead of the Memorial Day holiday or did not report last week due to light receipts. Those that did hold a sale saw lower offerings and mixed prices.
Medium and large 1-class (#1) steers weighing between 700-800 lbs. were mostly lower than in past weeks. The prices across the country ranged from $115-154 with most averages falling in the $130s.
Missouri: On Monday, May 21, the Joplin Regional Stockyards sold 6,425 head of feeder cattle. All calves and yearling heifers sold down $2-5, while yearling steers were steady to down $3. Yearling benchmark steers sold between $136-150.50. A small group of #1, 730-lb. steer calves averaged $130. The 2018 Ozark-Osage Ranch Study Tour went through the Joplin Regional Stockyards on Saturday, May 26. Look for coverage of the visit in next week’s paper or online this week.
New Mexico: The Clovis Livestock Auction sold fewer feeder cattle last week, making for few comparable sales. Feeders under 700 lbs. were up $7-12 with the best advance on 3-weights. Heavier feeders were steady to up $3. Number 1, 7-weight steers ranged from $115-140.25 with most averages being on the lower end.
Oklahoma: Fewer cattle were sold last week at the OKC West-El Reno sale, but prices were much better. Steers under 900 lbs. were up $8-10 and lighter steers were up $5. Heifers were up $4-7. Calves were lightly tested, but a higher undertone was noted. Demand was called good to very good on the average though attractive offering. Benchmark yearling steers ranged from $138-152.
South Dakota: The best test on feeder steers last week at the Hub City Livestock Auction was for yearlings weighing 850-950 lbs. They were steady to up $1. Midweight heifers were up $3-6 with instances of up $10 on 6-weights. Demand was called good on the attractive offering of backgrounded and home-raised feeders. Two lots of #1, 7-weight yearling steers ranged from $137-154.
Texas: Only 340 head sold at the Amarillo Livestock Auction last week, meaning there were too few sales for any accurate comparisons. Trade was called slow as the recent market crash made buyers gun-shy. A total of 14 head of #1, 7-weight yearling steers sold, ranging from $125-135.
The near-term feeder futures gained a net $4-5 over the course of last week. By Thursday’s settlement, the May feeder contract had settled at $136.40 and the August contract settled at $143.30.
Thursday was the last day of trade for the May feeder contract, meaning there was decent convergence happening between the cash and the futures markets for feeder cattle. September is now the new on-deck month for feeders. Over the course of the week, the September contract gained a net $5.30 with a Thursday settlement of $143.10.
“Triple-digit gains have quickly moved into the feeder cattle complex,” commented DTN’s Analyst, Rick Kment, on Thursday’s trade action.
“There is growing support in all cattle trade although the sluggish market activity expected through the last half of the week could add even more volatility to the complex.” — Kerry Halladay, WLJ editor
