The markets last week were a case of down and out; prices were down and the cash fed cattle trade was nowhere to be seen.
By close of Thursday, not even 2,000 head had been confirmed sold on the negotiated cash fed cattle trade. A few handfuls of cattle sold sporadically throughout the week, with high-Choice heifers bringing $126-127 live and mixed lots of high-Choice feeders bringing $200 dressed, but the volumes were too low for a market test. If representative, the sales were steady with the week before.
But there were other things on people’s minds last week.
“The outside markets (read: Equities) are, of course, what everyone will be watching today,” commented Andrew Gottschalk of Hedgers Edge on Feb. 6.
“The largest single-day break in the [Dow Jones Industrial Average] ever has traders very, very nervous. Thus far, this has not spilled into the cash cattle or ag markets, though futures traders will be more likely to be terrorized by any further declines or disruptions in those outside markets. As a point of reference, the Dow averages remain more than 20 percent higher than they were a year ago. It does all remain relative, does it not?”
The futures markets did some tumbling following the plummeting of the Dow, but most of the slow bleed has been attributed to cattle market-related issues.
“Futures are approaching overbought status again and another correction is certainly possible at any time,” said Cassie Fish of the Beef Report at the beginning of last week.
“Top picking is tempting for some and challenging for all. Just because the market will decline in Q2 and Q3 doesn’t make the decision of when and where to sell the market any easier. Many, as evidenced by the open interest, are short-hedged already.”
By Thursday’s settlement, the February contract lost a net $1.08 at $125.77, and the April contract lost a net $2.40 at $123.72.
In the beef markets, the cutouts yo-yoed over the course of the week, but the net movement was a rather muted sideways overall. By close of trade Thursday, the Choice cutout had lost a net 57 cents at $208.53. The Select cutout on the other hand gained a net 34 cents at $203.79.
“Boxed beef values won’t start to gain steam until the second half of February,” commented Fish. “The immediate seasonal for boxes is usually weaker, but this year prices are stronger than typically.
Gottschalk had a more dower outlook.
“Seasonally, weak demand should persist through March. The month of March remains the weakest demand month of the year, declining 2.4 percent below February demand. April demand has also been disappointing in recent years, as retailers have compensated by extending June features into the July 4 week. This period is then followed by the ‘dog-days’ of summer.”
Feeder cattle
Demand for feeder cattle seemed to have improved last week. Most sales had fewer cattle, but reported higher prices compared to the Jan. 29-Feb.2 prices. The disparity between calves and yearlings of the same class and weight was quite apparent in the southern border and Southern Plains states, but almost nonexistent in other regions.
Medium and large 1-class (#1) steers weighing between 700-800 lbs. were in ready supply, with most sales seeing a few large groups of yearlings on offer.
Colorado: There were fewer cattle sold last week at the Winter Livestock auction of La Junta, but prices were generally higher. Steer calves were up $3-5, while yearlings were up $1-5 with preference for lighter animals. Heifers were up $2-8 with preference for 5-weights. Benchmark steers ranged from $145.50-159.50.
Iowa: The Bloomfield Feeder Cattle auction sold light feeder steers up $8-10, with steers and heifers over 650 lbs. discounted $1-2. Light heifers were up $10-12. There were only calves in the #1, 7-weight offering, and they ranged from $141.50-$165.50.
Kansas: The Winter Livestock Feeder Cattle Auction of Dodge City also sold fewer cattle last week than the week before, but prices were steady to up $2-3 on feeders and a higher undertone on calves. Two groups of benchmark yearling steers sold between $143-156.10.
Missouri: The volume of cattle sold at the Joplin Regional Stockyards last week was half of what it was the week before. Calves were generally up $2-5, while yearlings and calves over 600 lbs. were called steady. The low turnout was credited to the cold weather and winter storm. Two large groups of #1, 7-weight yearling steers averaged $150 for the 727-lb. group and $145.31 for the 768-lb. group.
Nebraska: Volumes at the Bassett Livestock Auction Market were also down last week. Steers and heifers were said to have traded unevenly steady on good demand from those who braved the cold. Several large groups of #1, 7-weight yearling steers sold from $154.50-175.75.
New Mexico: At the Clovis Livestock Auction, volumes were only down slightly. Feeder steers under 600 lbs. were up $1-3, while heavier steers were more attractive and saw premiums of $7 over last week. Heifers were called mostly steady to strong. Benchmark yearling steers traded between $141.25-153, while a group of value-added calves averaged $138.17.
Oklahoma: Almost 12,000 head of feeder cattle sold at the OKC West-El Reno sale. Feeders sold up $1-2 on good demand, while calves were called mostly steady, though some light heifer calves were said to be up $1. Quality was called average to mostly attractive and demand was good. Numerous groups of benchmark steers sold between $141 for some heavy calves to $156.75 for some light yearlings.
South Dakota: Steers and heifers were steady to up $5 at the Hub City Livestock Auction, though steers over 800 lbs. were down $2-4. Seven-weight heifers were down $2. Demand was said to be good to very good, especially on the loads of home-raised, reputation Red Angus replacement heifers. Benchmark yearling steers ranged from $145.75-169.75.
Texas: Only 675 head sold last week at the Amarillo Livestock Auction, and prices were mostly steady on limited comparable sales. Trade activity was called moderate on moderate to good demand. A 29-head group of #1, 764-lb. yearlings averaged $143.50, and a six-head group of #1, 765-lb. calves averaged $130.50.
Utah: The Anderson Livestock Auction only sold 275 head of feeders last week. Both steers and heifers were up $3-4. Benchmark steers ranged from $135-144.
Wyoming: The Torrington Livestock Commission sold just under 5,000 head of cattle last week, down slightly from the week before. Steer calves sold steady to up $6 while yearlings were up $2-4. Heifer calves were steady to up $5 and yearlings were steady to up $2. Two large groups of benchmark yearling steers averaged $151.88 for the 774-lb. group and $162.79 for the 727-lb. group.
The feeder cattle futures were also pressured last week, with the March contract losing a net $2.67 to settle last Thursday at $147.25. The April contract lost a net $3.12 with a Thursday settle of $148.65.
“Even though prices turned lower at the end of the trading session, wide trading ranges were seen through the complex as front-month March contracts held a $3-per-cwt. trading range Thursday,” commented DTN’s Analyst, Rick Kment. “Prices ended $1.05 per cwt. lower, as the overall lack of buyer support seemed to create even more uncertainty in the market at the end of the week.” — Kerry Halladay, WLJ editor
