The whole of the market last week could be summarized as down about $1.
By close of trade on Thursday, Oct. 11, almost 72,000 head of negotiated cash fed cattle had been confirmed sold for the week with about half of that trade happening that day. Prices ranged from $108-111.50 (average $110.83) live and $171-176 ($173.82) dressed. This compared to the prior week’s $111-111.50 live and $174-175 dressed.
“It is essential to maintain aggressive marketings going forward, particularly as December futures become the lead month,” warned Andrew Gottschalk of Hedgers Edge.
“A weak basis can discourage sales, which will lend near-term support to the market, all the while creating a potential backlog into December.”
Both near-term live cattle futures markets lost ground last week. The October contract lost a net $1.17 over the course of the week to settle Thursday at $112.63 and the December contract lost a net $1.37 with $116.78.
“Some critical support areas were violated with yesterday’s weakness in live cattle and feeder cattle futures,” Gottschalk commented Thursday morning.
“This may lead to increased selling short term and some liquidation was noted on the decline. However, ‘Funny Money’ is expected to defend their net long position on any significant intraday weakness.”
Cassie Fish of the Beef Report observed that, “Cattle futures technically are well into a correction now, approaching oversold. All months are lower on the week and the charts have a negative appearance.”
Beef
Gottschalk pointed out Wednesday’s sharp decline in the stock market when discussing beef demand. The Dow Jones Industrial Average lost over 800 points (over 3 percent) on Wednesday. The losses continued Thursday, with an additional 546 points (2.13 percent) lost. The S&P 500 and the NASDAQ also saw strong losses both days, with the former losing 145.59 points (about 6 percent) and the latter losing 279.14 points (about 3.75 percent).
“The sharp decline in the stock market valuation (especially should this current decline continue) can shake consumer confidence very quickly,” Gottschalk warned.
“We have previously written that any loss of demand poses a greater price risk to the market than increasing fed cattle supplies. It has been this excellent total demand which has allowed the domestic market to absorb record beef and meat supplies put forth this year. At the present time, demand factors are positive—provided consumer attitudes remain positive.”
It’s not just at home that beef demand looks good. New monthly records for beef export value keep being set. The recently-released beef export report for August—read about it on page 12—highlighted the new August value record of $750 million.
At home, wholesale beef prices have remained relatively steady. The Choice and Select cutouts traded values with the former losing 74 cents over the course of the week at $202.51 and the latter gaining 75 cents at $192.49.
“Packers are still in the process of cleaning up some sloppy items that have plagued the cutout value this week, but talk is this is occurring and the cutout need not seek a lower level,” reported Fish.
“So, boxes will close out this week at a sloppy buck or two lower. Meaning there was a small margin contraction this week, but packers are still very profitable.”
Estimates on packer margins stand at about $135 per head.
Feeder cattle
Too much water in the heart of cattle country caused a lot of people and cattle to stay stuck at home. Many feeder auctions reported reduced sale volumes and buyers as a result.
Prices for feeder cattle in general were mixed, though numerous auctions reported the discounts on bawling calves are getting steeper. Buyers at the Joplin Regional Stockyards in Missouri and the Philip Livestock Auction in South Dakota were even discounting hastily-weaned or partially-preconditioned calves. Increasingly, long-weaning and full preconditioning pays.
Prices reported for medium and large #1 steers weighing between 700-800 lbs. were quite good where they existed. Most sales reported averages solidly in the $150s and lower $160s.
California: The Cattlemen’s Livestock Market of Galt sold 1,261 head last week. Feeders of all sorts were called steady. Number 1, 7-weight feeder steers ranged from $130-146.
Colorado: Sales volumes were fairly steady last week at the Winter Livestock auction of La Junta. Prices however were mostly lower, hitting calves hard. Attractive, weaned calves were down $3-5 with instances of down $8. Bawling calves were discounted $10-15. By comparison, yearling feeders were steady to up $1. Two lots of benchmark yearling steers sold for $157.50 for the light (710 lbs.) lot and $159.50 for the thin-fleshed heavy lot (778 lbs.)
Kansas: Excessive rain and flooding made for a poor turnout at last week’s Winter Livestock Auction. With only 856 head sold, it was hard to offer market trends. Best comparisons were on heavy 8-weight steers, down $3-6, and light 8-weight heifers, down $4-5. Steer calves were said to be steady and a lower undertone was noted in heifer calves. Number 1, 7-weight yearling steers ranged from $147.50-152.50.
Missouri: Long-weaned calves were the stars at the Joplin Regional Stockyards at steady to up $5 prices. In contrast, freshly weaned or bawling calves were discounted up to $5. Yearlings were called steady. Benchmark yearling steers ranged from $154-164.
Montana: The Public Auction Yards sold 1,879 head last week, up significantly from the week before, making market trends difficult. Higher undertones were noted. Only four head of #1, 7-weight steers—described as “full”—sold at $149.
Nebraska: There were no comparable sales at the Valentine Livestock Auction last week due to significantly larger sales volumes. Several lots of #1, 7-weight steers sold, ranging from $159.50-184.70. The higher-end lots were described as “thin fleshed” and “fancy.”
New Mexico: The Clovis Livestock Auction has begun two days of sales each week due to increased volumes. Feeder cattle are now being sold on Thursdays and market cows and bulls will be sold on Fridays. This will continue until volumes return to normal. Light steers were called unevenly steady to down $2, while light heifers were steady to up $4. No comparable trends on feeders over 600 lbs. Three small lots of calves, two of them value-added, sold between $130.50-142.50.
Oklahoma: The National Stockyards sold 5,834 head of cattle. Feeders were $3-5 lower with calves called sharply lower with $6-8 discounts. Bawling calves saw even greater discounts at $10. Benchmark steer calves ranged from $140-151 and benchmark yearlings ranging from $147.50-162.50.
South Dakota: The Philip Livestock Auction sold more cattle last week, but at mixed prices, compared to the previous sale. Steers were mixed up and down $4. Heifers were steady to up $6 with the exception of light 5-weights, which were down $2. The auction report noted that most of the offering was fully preconditions and the lack of fall shots on a few calf lots “resulted in significant discounts.” There were no #1, 7-weight steers reported sold, but the #1, 6-weight calves reported sold between $166.50-175.50.
Wyoming: The Riverton Livestock Auction saw mostly steady sales volume, but higher prices. Yearling steers sold up $8 and heifers were steady to up $4. Calves under 500 lbs. were up $5-16 for steers, with instances of up $28, and $2-5 for heifers with instances of up $9-10. One large lot of 106 head of #1 yearling steers averaging 725 lbs. sold for $168.45.
Feeder futures were much like live cattle futures; both near-term contracts lost over $1 over the course of the week. The October contract settled Thursday at $156.73 and the November contract settled at $156.75.
“Cattle futures settled lower yesterday in sympathy with the equity market meltdown,” noted Troy Vetterkind of Vetterkind Cattle Brokerage on Thursday morning. He added that near-term feeder futures are sitting at the upper end of the “important support level” of $155-156. — Kerry Halladay, WLJ editor
