Following two consecutive holidays, the markets are ready to get moving again. Trade on the board was higher over the week and fed cattle saw some higher bids, but boxed beef prices—especially Choice prices—sharply dropped over the week.
Live cattle futures saw some modest gains over the week. The February contract gained a little over $2 to close at $171.12, and the April contract also gained about $2 to close at $174.30.
Cash trade through Thursday totaled under 20,000 head. Live steers sold from $173.50-175, and dressed steers sold from $275-275.50.
“The lack of strong cash and beef market support early in the week has added to buyer concerns over the last couple of days, but the majority of price gains over the last week are still holding which is limiting any significant market liquidation at this point,” DTN wrote in their midday Thursday comments.
Cash trade for the week ending Dec. 31 totaled 64,808 head. Live steers averaged $172.38, and dressed steers averaged $272.89.
The national weekly direct beef type price distribution for the week of Dec. 25 to Jan. 1 was the following on a live basis:
• Negotiated purchases: $172.39.
• Formula net purchases: $174.02.
• Forward contract net purchases: $181.52.
• Negotiated grid net purchases: $175.02.
On a dressed basis:
• Negotiated purchases: $272.80.
• Formula net purchases: $274.98.
• Forward contract net purchases: $286.12.
• Negotiated grid net purchases: $279.73.
Slaughter through Thursday totaled 380,000 head, about 30,000 head more than a week earlier during the holiday-shortened week. Total slaughter for a week earlier is projected at 508,000 head. Actual slaughter for the week ending Dec. 23 was 621,036 head. The average steer dressed weight was 942 lbs., 1 lb. above the prior week.
Boxed beef prices have rapidly declined after the holidays. The Choice cutout lost more than $15 to close at $275.90, and the Select cutout lost 42 cents to close at $258.82. The spread was $17.08.
“This is the lowest the cutout has printed since February 2023 and the break has most everyone in the cattle business talking,” wrote Cassie Fish, market analyst, in The Beef on Thursday. However, she noted, perhaps it isn’t all bad news.
“With the cutout finally below a year ago levels and exploring major long-term support in the $270 area for the first time since February a year ago, legitimate buying interest may surface,” she said.
Packer margins are back in the red, she said, with cattle prices up about $6/cwt from the December low. “The only avenue a packer has is to manage his throughput, not run Saturdays, and basically hunker down for what looks to be a tough Q1 from a packer’s perspective,” Fish said.
The January cattle inventory report, which comes out in a few weeks, is likely to report that herd building has not yet started. “Rebuilding will begin in rapid order during 2024, but the progress will not be quick and the evidence will stretch for the next several years with weather cooperating,” wrote the Cattle Report on Thursday.
Feeder cattle
Feeder cattle futures saw some modest gains over the week. The January contract gained just over $2 to close at $224.67, and the March contract gained about $2.50 to close at $225.65.
The CME Feeder Cattle Index gained nearly $9 to close at $228.65.
“Market shifts in outside commodities and grain trade is also starting to impact overall feeder cattle price shifts, as traders focus on more normal volume over the next couple of weeks,” DTN wrote.
Corn futures saw some losses, with the March contract down 8 cents to $4.66 and the May contract down 7 cents to $4.79.
“The new year will stiffen competition for feeder cattle in the spring,” the Cattle Report said. “The already small supply of replacements for the feedlot will get even smaller this year.”
The report continued, “As feedlots compete, some pens will be forced to go empty. Margins for those choosing to pay the price for replacements will be negative against a underpriced futures board.”
Iowa: Russell Livestock in Russell sold 2,325 head on Monday. Compared to a week earlier, steers 500-600 lbs. sold steady to $6 higher and steers over 600 lbs. sold mostly $7 lower. Heifers 450-650 lbs. sold $5 to sharply higher, while heifers over 650 lbs. sold steady. Benchmark steers averaging 774 lbs. sold from $204-222, averaging $213.52.
Kansas: Winter Livestock in Dodge City sold 3,050 head on Wednesday. There was no recent price comparison, as previous sales were held before the holidays. A higher undertone was noted for feeder cattle compared to two weeks earlier. Benchmark steers averaging 729 lbs. sold from $228-248, averaging $239.78.
Missouri: Joplin Regional Stockyards in Carthage sold 11,000 head on Tuesday. Compared to the last auction two weeks ago at the mid-session, feeder steers and heifers sold steady to $8 higher. Benchmark steers averaging 767 lbs. sold between $221-225, averaging $223.33.
Nebraska: Bassett Livestock in Bassett sold 4,230 head on Wednesday. Due to the holidays and no recent auction, an accurate trend could not be given. Benchmark steers averaging 718 lbs. sold between $260.50-263.75, averaging $261.48.
South Dakota: Sioux Falls in Worthing sold 4,438 head on Tuesday. Compared to the sale last held two weeks earlier, light steers sold $3-6 higher, yearling steers sold mostly $3-7 higher, light heifers sold $4-6 higher and yearling heifers sold $4-5 higher.
Wyoming: Torrington Livestock in Torrington sold 2,715 head on Wednesday. There was no comparable trend as it was the first feeder special of 2024. There was a smaller offering with a very active market. All classes of feeders sold with higher undertones throughout the day. Benchmark steers averaging 764 lbs. sold from $230-233, averaging $230.97. — Anna Miller, WLJ managing editor
