Packers remain unincentivized to purchase and slaughter cattle amid weaker cutout prices.
Live cattle futures traded mostly steady, but ultimately closed a hair lower over the week. The October contract lost 50 cents to close at $184.97, and the December contract lost 85 cents to close at $189.50.
It was another week of waiting for packers to buy fed cattle, with about 25,000 head sold through Thursday afternoon. Live steers sold from $183-187, averaging $185. Dressed steers sold from $285-293, averaging $290.
“Last week’s increase in cattle price of $1.24 and the continued weak wholesale beef market has packers attempting to hold cash this week at steady if they can,” wrote Cassie Fish, market analyst, in The Beef on Thursday.
Cash trade through Sept. 17 totaled 74,039 head. Live steers averaged $184.21, and dressed steers averaged $282.35.
The national weekly direct beef type price distribution for the week of Sept. 11-18 was the following on a live basis:
• Negotiated purchases: $184.28.
• Formula net purchases: $185.36.
• Forward contract net purchases: $179.47.
• Negotiated grid net purchases: $183.81.
On a dressed basis:
• Negotiated purchases: $292.56.
• Formula net purchases: $289.75.
• Forward contract net purchases: $277.34.
• Negotiated grid net purchases: $296.18.
Slaughter through Thursday totaled about 498,000 head, compared to 502,000 head a week earlier and 511,000 head a year earlier. Projected total slaughter for a week earlier is 632,000 head. Actual slaughter for the week ending Sept. 9 was 558,921 head. The average dressed steer weight was 917 lbs., 9 lbs. higher than the prior week.
“With boxed beef values struggling mightily, having sagged back to the summer lows, packers are rumored to have trimmed this week’s harvest,” Fish said. “Expectations for this week are now 620k head, compared to last week’s 632k head, which followed a tiny Labor Day week harvest the prior week. Packers are defending margins by reducing product availability to stabilize the cutout.”
Boxed beef prices were several dollars lower over the week. The Choice cutout lost about $4.45 to close at $301.93, and the Select cutout lost close to $8 to close at $279.
“What is needed for another leg up in this bull market is a seasonal improvement in Q4 beef demand,” Fish said. “The spring Choice boxed beef rally exceeded $340 by just a bit and the August boxed beef rally stopped short of $320. Typically, the Q4 boxed beef rally exceeds the August push, so reaching $320 to $340 in November still seems achievable. But that will require a brisk rib rally to lead the way.”
Feeder cattle
Feeder cattle futures gained a few dollars over the week, with the September contract up about $2 to $253.27 and the October contract up about $4 to $257.77.
The CME Feeder Cattle Index gained about $3 to close at $254.09.
Corn futures have been headed steadily lower. The December contract lost 5 cents to close at $4.75, and the March contract also lost 5 cents to close at $4.90.
“Yes, demand still remains strong in the countryside as thin supplies of feeders keep the buying environment hot, but from a technical sense, the market is cold and cautious,” ShayLe Stewart, DTN livestock analyst, said on Thursday.
Kansas: Winter Livestock in Dodge City sold 2,482 head Wednesday. Compared to the previous auction, feeder steers and heifers 750-900 lbs. sold steady. Steers and heifers 450-750 lbs. sold $8-10 higher. However, reputation and thin-fleshed calves sold $20-23 higher. Benchmark steers averaging 736 lbs. sold between $251-260.50, averaging $254.37.
Missouri: Joplin Regional Stockyard in Carthage sold 8,000 head on Monday. Compared to a week earlier, feeder steers and heifers sold $2-4 higher. Benchmark steers averaging 768 lbs. sold from $252-267, averaging $259.72.
New Mexico: Roswell Livestock Auction in Roswell sold 1,225 head on Tuesday. Compared to a week earlier, steer calves 300-550 lbs. sold $3-10 lower and 550-600 lbs. sold $11 higher. Feeder steers 600-700 lbs. sold $5-6 lower. Heifer calves 400-450 lbs. sold $8 lower, 450-500 lbs. sold $11 higher, 500-550 lbs. sold $3 lower and 550-600 lbs. sold sharply higher. Benchmark steers averaging 771 lbs. sold from $206-231, averaging $223.64.
Nebraska: Tri-State Livestock in McCook sold 2,250 head Monday. There were not enough sales at the last auction for an accurate comparison. A group of steers averaging 877 lbs. sold between $240.50-250, averaging $247.06.
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 7,500 head on Monday. Compared to the last sale, feeder steers and heifers sold $2-5 higher. Steer and heifer calves sold $4-8 higher. Benchmark steers averaging 784 lbs. sold from $254-268, averaging $257.86.
South Dakota: Sioux Falls Regional Cattle in Worthing sold 2,961 head Monday. Compared to the last auction, steer and heifer calves sold with steady to higher undertones. Yearling feeder steers 650-750 lbs. and 800-850 lbs. sold $6-8 higher; other weights were mostly steady. Yearling heifers sold with steady to higher undertones. Benchmark steers averaging 733 lbs. sold between $273-287, averaging $283.17. — Anna Miller, WLJ managing editor
