Cattle markets met some resistance after the latest Cattle on Feed report that showed placements up 11 percent over last July; about 5 percent higher than the average analyst’s guess.
Fed cattle trade started early in the week with Texas feeders trading at $104 and selling as many cattle as they could. Then by Thursday, live negotiated trade was at $102 with no support in sight. Most live trade was between $101-$104 and dressed trade between $162-163. There were 33,500 head of formula grid cattle priced at $171.45 weighing 910 lbs. on Thursday. Packers were light buyers coming into a holiday-shortened week. There are reports that they have plenty of cattle around them and it will be difficult to push the market higher.
Feeder cattle markets followed; most markets were reporting feeder steers down $4-6. Corn markets were showing some weakness as the real damage from the derecho storm in Iowa came in—they estimated a 185 million bushel loss on corn, but there is still going to be a near-record crop.
Futures markets took a slow slide every day last week, with October live cattle down to $103.92 and December down to $107.82. September feeders were down several dollars on the week with September closing at $137.60 and October down to $138.32. Feeders have lost $10 since the middle of August.
Packers were still aggressive processing cattle, with slaughter numbers expected to be around 640,000 head last week. Margins remain strong even though beef values are meeting seasonal weakness. Choice boxed beef was quoted Thursday afternoon at $227.24 and Select was at $212.50 on 148 loads. Carcass weights are 26 lbs. over last year.
The beef industry has produced 2.2 percent less beef and has slaughtered 4.8 percent fewer cattle. Those heavy weight cattle are making a big difference in total beef tonnage. The industry still has an overt supply of slaughter-ready cattle.
Cassie Fish, market analyst in The Beef, remarked, “Given the ample inventory owned by packers and the modest kills for this week and next, it can be argued that higher money next week just isn’t in the cards. Week-to-date negotiated volume is 65k as of [Thursday] morning. Boxed beef values will be seasonally declining, and packers have committed cattle and cattle bought with time to supplement their needs.”
The folks at the Cattle Report said, “Stocker and feeder prices are adjusting to the larger supplies currently moving into mostly full feedyards. Prices are lower across all regions and classes of cattle. Placements patterns for August continue large, threatening further price declines for early next year. The heaviest placement months are in front of us. Feeder prices are outrunning calf prices as rains in the Southern Plains provide winter grazing opportunities.
“Modified live virus shots for cattle require an initial shot followed by a booster shot two weeks later. Whether in summer heat, winter cold or just normal conditions, gathering cattle for a second shot is stressful and labor intensive. We watch daily as advertisers hawk medicines for humans with slow release functionality and wonder why the livestock business can’t solve what today is a simple problem.”
Feeder cattle
Joplin Regional Stockyards in Carthage, MO, offered 5,751 head and reported compared to the week prior, steer calves and yearlings steady, except yearlings over 800 lbs. were weak to $2 lower. Heifer calves were steady to $3 higher. Demand was moderate to good, supply moderate. Benchmark steers weighing 770 lbs. averaged $140.17.
OKC West Auction in El Reno, OK, sold 4,994 head Wednesday and reported compared to last week, feeder steers under 800 lbs. sold $3-6 lower, over 800 lbs. were steady to $1 higher. Feeder heifers traded $3-6 lower, with the exception of 800-900-lb. heifers mostly $1-2 lower. Demand was moderate, good for feeder steers. Benchmark feeder steers averaged $136.56, weighing 775 lbs.
Hub City Livestock Auction in South Dakota sold 2,872 head and reported compared to last week, the best test was on steers 800-850 lbs. at $5-6 lower and 950-1,000 lbs. were $ lower. The best test on heifers was 850-950 lbs. at $2-3 lower. Benchmark steer weighing 730 lbs. averaged $144.44.
Kingsville Livestock Auction in Kingsville, MO, reported 1,342 head last Monday. Compared to the week prior, steers and heifers sold steady. Demand was moderate for a light to moderate supply of mostly yearlings and several were carrying some flesh.
Fed cattle traded lower to start the week as the large numbers in the feedyard and increased carcass weights as the result backlog have given packers the leverage. Slaughter cows sold $5-8 higher, bulls $2-3 higher. — Pete Crow, WLJ publisher
