Last week’s markets saw the near-term futures contracts make good work of their recovery. At the same time, the cutouts continued to fall, and the negotiated cash fed cattle trade struggled to maintain itself at week-ago levels.
“The long overdue correction after the big post-fire sell-off, has brought the market back to the 40-day moving averages and pushed technical indicators into an overbought position,” cautioned Cassie Fish of the Beef Report.
“The bull spreads, which had dominated action this week, have rolled over, another sign the upside correction is complete.”
By close of trade on Thursday, Sept. 19, the near-term live futures contracts had gained about $1.50-2.00 compared to the prior Friday with the October contract settling at $99.80 and December at $105.83. Net gains in the near-term feeder futures contracts were larger at about $3.50-$4.50 with September settling at $139.95 and the October contract settling at $138.93.
“Plenty of hopeful traders are eyeing the cattle charts and speaking of V bottoms, head and shoulder bottoms, etc.,” continued Fish.
“Only these are not normal times, with a major plant down and further upside in cash fed cattle prices at this time is unlikely. What is more probable is the market, both futures and cash, is carving out a trading range that could see a great deal of back and forth action from now until year’s end.”
The cutouts continued their relatively slow decline last week. By Thursday, the Choice cutout had lost a net $2.71 ($218.17) compared to the prior Friday’s close. The Select cutout lost a net $6.44 with $192.16.
“Beef cutout values continue to sink toward the next level of price support, $213-217 basis the Choice,” noted Andrew Gottschalk of Hedgers Edge on Wednesday.
“Ads in Denver this week are lacking aggressive beef features. They are mostly end items and ground beef, if found amongst the ads for the competing meats. That said, the sharp decline in beef cutout values will help to keep beef in the forefront of meat features going forward.”
The feeder cattle auctions around the country seemed to be fully back in business last week after holiday- and weather-related disruptions had mostly cleared. Overall, the surveyed auctions reported mostly higher volumes and steady to higher prices. Medium and large #1 class steers weighing 700-800 lbs. sold mostly in the $130s to lower-$140s, with several sales noting either discounts on unweaned, unbackgrounded calves, or premiums or stronger demand for weaned, preconditioned calves.
California: Feeder cattle of all weights were called steady at the most recent Cattlemen’s Livestock Market sale. Despite that, the upper end of the price range on #1, 7-weight steers increased $7 to $110-132.
Kansas: The Winter Livestock auction of Dodge City sold just over 3,000 head of feeders last week. Feeder steers were steady to $3 higher while heifers were mostly steady to $1 higher. Last week was the sale’s first special calf sale of the season, so there were no market trends offered on calves. Despite this, it was noted that the best calf demand was for weaned calves with a vaccination program. Two lots of benchmark steers sold between $138.50-147.75.
Missouri: Fewer feeder cattle sold last week at the Joplin Regional Stockyards than the week before, but prices on feeders were up $2-5 on most with spots of up $6-8. Benchmark steers sold between $135-151, inclusive of a lot of unweaned calves.
Nebraska: Sale volume at the Tri-State Livestock auction was pretty steady at 2,365 head of feeders sold last week. Feeders under 650 lbs. were called $2-3 lower, while heavier steers were up $3-6 and heavier heifers were up $4. Demand was called moderate to good. There were no #1, 7-weight steers sold, but the 6-weights ranged from $145-162, and the lot of 8-weights averaged $143.
New Mexico: The volume of feeder cattle sold at the Clovis Livestock Auction last week jumped by over 1,100 head. Steers of all ages were called $2-4 higher, while heifers under 500 lbs. were down $1 and heavier heifers were up $1-3. The quality of the offering was described as average to very attractive with very good demand on the attractive lots. Three lots of benchmark steers sold. The lightweight yearling lot averaged $135.69, while the two lots of unweaned steer calves ranged from $120-125.
Oklahoma: The OKC West-El Reno sale sold almost 6,700 head of feeders last week with prices up $2-5 on both sexes of yearling feeders. Calves fetched $3-8 premiums compared to the prior week with a few instances of $10 higher. Demand was called good to very good on the plain- to average-quality offering. Large lot size was rewarded as much as age and status in the sales of #1, 7-weight steers. The two large lots of standard-flesh yearlings ranged from $140-149.50, while the three small lots of unweaned calves or fleshy yearlings ranged from $137.50-141.
South Dakota: The Mitchell Livestock Auction sold a third the volume of feeders last week as it did the week before, making market trends difficult. Rains and flooding made many of the roads to the sale difficult as well, likely causing the low turnout. Where comparable, feeders were called steady to up $3. Prices on benchmark yearlings sold between $141.50-147.50.
Washington: Exactly 1,600 head of feeder cattle sold last week at the Toppenish Special Feeder Cattle Auction. The last time this sale was held was back in June, meaning there were no relevant comparisons to be made. Trade was called active on good demand with the best demand for heavy calves and weaned calves. Only one lot of thin-fleshed 7-weight steers sold in the #1 class and averaged $156.50.
Wyoming: The Torrington Livestock feeder cattle auction sold almost double the volume of feeder cattle last week as compared to the week before. Feeder steers and heifers were up $3-6, while the light trade of feeder calves was called sharply higher. Two lots of #1, 7-weight yearling steers ranged from $138-149. — Kerry Halladay, WLJ editor
