Negotiated cash cattle trade failed to materialize last week. By close of trade Thursday, not even 6,700 head had been confirmed sold for the week. Wendesday’s trade set a reportable level for dressed cattle at $174-175 (average $174.78), down about $4 from the prior week’s established average. However, recent weeks have seen the vast majority of trade occur late on Fridays.
Most of last week’s market attention fell to the impending World Agricultural Supply and Demand Estimates report, released on Thursday, and the wild movements of the futures contracts on Wednesday. Near-term live cattle contracts saw losses starting at $1.50 and feeder cattle contracts saw losses around $2.50.
Cassie Fish of the Beef Report called it a “fire drill,” saying Thursday morning: “CME cattle traders got a big dose yesterday of what the modern age of computer-generated, algorithmic-based trading can do to a market in a short time span in an atmosphere of fear and uncertainty. Volume was huge, [111,000] contracts and open interest plunged to [319,000], a new low for the year.”
However, near-term contracts on both boards perked back up on Thursday as though nothing had happened.
“[T]he market has shaken off yesterday’s rout, opened higher and returned to the 100-day and 10-day moving averages like a heat-seeking missile,” Fish continued.
By Thursday’s settlement, though the near-term live contracts had made triple-digit gains that day, the losses from Wednesday had not been erased. The August contract was down a net $1.35 compared to the July 6 settle, and the October contract had lost a net $2.02 with $107.60.
The cutouts spent most of the week leaking lower, though the pace of the decline had slacked somewhat. The Choice cutout lost about $1.50 over the course of the week with a $206.58 Thursday close. The Select cutout lost $1.70 with $197.01 on Thursday.
Feeder cattle
Despite the uncertainty in the futures and in the cash live market, cash feeder cattle were strong last week. Most of the surveyed feeder auctions posted price increases, and prices on the various video feeder auctions were impressive.
Medium and large #1 steers ranged from the mid-$130s to the upper-$160s. Very few calves of any sort, let alone benchmark steers, were observed in the reports.
California: The Cattlemen’s Livestock Market in Galt sold more cattle last week than the week before, with most classes of feeders selling steady. Benchmark steers were $135-153.
Colorado: The Winter Livestock auction in La Junta saw the first sale report in weeks due to recent light receipts, meaning there was no market quote offered. Demand for calves and feeder cattle was called good. One 56-head lot of 778-lb., #1 yearling steers averaged $150.
Kansas: The Winter Livestock auction in Dodge City sold more cattle last week at higher prices. Feeder steers under 700 lbs. sold up $4-6 and heavier steers were up $1-3. Heifers were called mostly $1-3 higher and there were too few calves of either sex for a market trend. Two lots of #1, 7-weight yearling steers sold. The large lot averaging 723 lbs. brought an average of $158.14. The small lot of 757-lb. steers averaged $143.75.
Missouri: Almost 6,500 head of feeders sold last week at the Joplin Regional Stockyards. Feeders of both sexes were steady to down $3 compared to the prior sale. Several lots of yearling steers sold between $136-155.
Nebraska: The Bassett Livestock Auction sold 7,320 head last week. There were no trends offered since it’s been a while since the last sale. Demand was called very good. Two large lots of benchmark steers sold, with the heavy (773 lbs.) lot averaging $167.81 and the light (715 lbs.) lot averaging $165.78.
New Mexico: The Clovis Livestock Auction sold more cattle last week than it did in the previous sale in the last week of June, but feeder steers were steady to down $2, with instances of down $5-7 on 5-weights. Heifers were down, though not so badly, at steady to down $1. A trio of small lots of #1, 7-weight cattle sold between $137-146.
Oklahoma: The OKC West-El Reno sale sold over 10,500 head of feeder cattle last week. Feeder steers were up $2-5 while heifers were up $1-4. Calves of both sexes were up $4-6. Benchmark steers sold between $141-156.
South Dakota: The Hub City Livestock Auction sold fewer cattle last week than it did the week before, being the only sale of the surveyed auctions to do so. The best test was on 9-weight steers, which were up $5-8. Heifers were poorly tested. One lot of 14 head of 797-lb. yearling steers sold for $146.75.
Much like the live cattle contracts, the near-term feeder cattle contract made impressive recoveries on Thursday after Wednesday’s losses, but they were not enough. Compared to the July 6 settle, last week saw the August contract lose a net $1.18 at $151.02 on Thursday’s settlement. The September contract lost a net $1.30 with $150.97 on Thursday.
“I suspect the lows yesterday will now hold us on the downside now for the near term, but rally potential is likely going to be limited beyond $107-108 in August live and $153-154 in August feeder cattle for another week yet,” projected Troy Vetterkind of Vetterkind Cattle Brokerage.
“Feeder cattle futures carry a premium to the CME index so they’ll likely need a couple of weeks to let the index catch up with the futures before they can extend higher going into the month of August.” — Kerry Halladay, WLJ editor
