Last week saw the mostly sideways markets tip slightly lower. Everything, save packer margins, was down last week.
The negotiated cash fed market repeated the previous week’s pattern of slow-to-start trade. By Thursday afternoon USDA report, almost 62,400 head of negotiated cash fed cattle had been confirmed sold for the week, with most of that happening Thursday. Prices ranged from $108-115 (average $110.30) live and $178-183 ($180.74) dressed.
These prices disappointed the expectations from earlier in the week of a weak steady trade compared to the prior week’s averages of $113.82 live and $183.88.
“There is nothing surprising about seasonal cash cattle weakness in late June, making today’s $110 trade in South far from unexpected,” commented Cassie Fish of the Beef Report on Thursday morning.
“Packers keep having it their way, as boxes hold miraculously steady this week, thanks to a robust beef 50s and chuck market, while at the same time cash cattle prices decline again,” she continued. Cutouts closed Thursday at $220.72 Choice (-$2.40) and $201.48 Select (-68 cents).
“A $110 cash market in the South this week was this week’s goal and with that in the bag, packers are pressing for even more. Widening packer margins the remainder of June is occurring for the packer, just as intended.”
The estimated per-head packer margin increased from about $189 on Friday, June 14, to $205 on Thursday, June 20 with it being the only area of consistent gains last week.
Fish did note the fundamentals are changing that could mean packers will get more pushback soon.
“Peak fed cattle supplies are easing just as the pressure for pen space is too. Basis is narrowing, so the trifecta of incentives to be an easy cash seller have finally begun to shift. This will likely provide some underlying support to cash prices in July. The industry is more current than last year and last year cash prices averaged $112.19 in July, having bottomed the last week of June. Packers a year ago got too short-bought heading into July and paid up big, forced to gather a huge amount of inventory.”
Whether or not that is or will be the case this year has yet to be seen, but word of increased fed cattle buys with time has cropped up more and more in recent weeks.
Futures contracts are painting a somewhat depressing image of future cattle prices. Both near-term live and feeder cattle futures saw yo-yoing last week, settling down slightly week to week on Thursday. In the live cattle futures, the June contract lost a net 60 cents with $108.18 while the August contract lost a net 33 cents with $103.95.
DTN’s Analyst, Rick Kment, attributed Thursday’s declines in the live cattle futures to a lack of support in the cutouts and triple-digit losses in the feeder contracts. This latter detail he attributed to the gains in the corn futures. By close of trade Thursday, the August contract had lost a net 83 cents over the course of the week with $134.70. The September contract lost a net 42 cents with $135.38.
Feeder cattle auctions were mixed last week, with various sales reporting no trends due to insufficient comparable sales. Prices on medium and large #1 class steers weighing 700-800 lbs. were mostly in the $130s and $140s.
California: The Cattlemen’s Livestock Market in Galt sold 1,236 head with feeder cattle of all weights and sexes selling steady. Benchmark steers sold between $122-145.
Kansas: The Winter Livestock auction sold over 1,100 head last week, slightly more than the week before. Despite this, there were too few comparable sales for a market trend on steers or calves of both sexes. Yearling heifers were called mostly steady to up $1. One 23-head lot of #1, 739-lb. yearling steers averaged $136.75.
Missouri: The Joplin Regional Stockyards sold about 500 head fewer cattle last week than the week before. Steer and heifer calves were called steady to up $3, while yearlings were mostly steady. The exception was 6-weight heifers, which were up $3-5. Benchmark steers ranged from $127-141, inclusive of a small lot of unweaned calves.
Nebraska: The Huss Livestock Market sold fewer cattle last week too, making for too few comparable sales for a market trend. Demand was called moderate to good on the mostly feeder supply. One 15-head lot of #1, 711-lb., thin-fleshed yearling steers averaged $158.
New Mexico: Sales volumes were also down at the Clovis Livestock Auction, but prices were mostly higher. Light steer calves were steady, with 5-weights selling $3 higher. Yearling steers over 500 lbs. were mixed up and down $3 with preference going to “fancy” lots and 8-weights. Heifers under 600 lbs. were up $1-3, except 3-weights, which were down $5. Heifers over 600 lbs. were up $1. Prices on benchmark yearling steers ranged from $123.50-135.
Oklahoma: The OKC West-El Reno sale sold over 12,700 head of feeders last week, almost 3,000 more than the week before. Steers were called mostly steady while heifers were down $1-2. Calves were too lightly tested for a market trend, but a “much lower undertone” was reported. Demand was called light to moderate for the plain- to average-quality offering. Benchmark steers ranged from $131.40-148.
South Dakota: The Hub City Livestock Auction sold just over half the volume of feeders last week as it did the week before. This made market comparisons difficult. The best tests were on heavy cattle. Steers 850-950 lbs. sold steady with instances of up $6 while steers over 1,000 lbs. were down $3. Eight-weight heifers were steady to down $4. Two lots of #1, 7-weight yearling steers sold; the standard-quality 10-head lot of 738-lb. yearlings averaged $145.85, while the 70-head lot of 772-lb. natural yearlings averaged $153.75.
Texas: The Amarillo Livestock Auction sold roughly twice the number of feeder cattle last week compared to the week before, making for too few comparable sales for a market trend. Lower undertones were noted. Benchmark yearling steers ranged narrowly in price from $125.50-130.50. — Kerry Halladay, WLJ editor
