Last week’s market spent most of its time in freefall. The near-term futures lost $5-6 in three days, and the cash fed cattle saw $8-10 losses in the same span of time. Then Thursday hit and seemed to offer some hope with gains across most of the market segments.
Whether it was a check on the seasonal declines or a “dead-cat bounce”—as in, anything dropped from high enough will bounce—has yet to be seen.
By close of trade on Thursday, over 92,000 head of negotiated cash fed cattle had been confirmed sold for the week. Prices on Thursday were the lowest of the week at $110-117 (average $112.20) live and $176-188 ($182.28) dressed.
“Trade is unfolding in a broad range, with significant price disparity between regions and delivery times,” noted Andrew Gottschalk of Hedgers Edge on Thursday. The best prices were seen in Iowa.
“The violation of support at $118 establishes the next level of cash price support at $108-$111. This level will begin to put many unhedged closeouts in the loss column. Hedgers will continue to capitalize on a record-wide basis by selling on any reasonable bid.”
After three days of triple-digit losses, the near-term live cattle futures contracts saw gains on Thursday. However, these late-week gains did not come close to recovering the ground lost from Monday through Wednesday. Compared to the May 11 settlement, Thursday saw the June contract at a net loss of $4.57 at $103.05. August’s $99.10 settlement was a $5.32 net loss.
“We are only a stone’s throw away from the spike reversal lows at $97.62 in August live cattle and $137 in August feeder cattle established on April 4, and if those don’t hold this market could really turn ugly,” commented Troy Vetterkind of Vetterkind Cattle Brokerage.
Beef prices also slipped last week. After several weeks of steady gains, the Choice cutout faltered on May 11, recovered, then lost ground again. By Thursday, the Choice cutout had reversed from Wednesday losses and surged to $232.68, rivalling the high from the week before.
Feeder cattle
The cash feeder cattle markets were overwhelmingly down last week with auction markets reporting lower prices and smaller offerings. Medium and large 1-class (#1) steers weighing between 700-800 lbs. were notably down. Prices ranged from the mid-$120s to lower-$150s, with most averages in the $130s and low-$140s. Several auction reports cited the meltdown in the feeder futures as a cause for the declines.
Colorado: Sales last week at the Winter Livestock Auction of La Junta were not even half of what they were the week before. A lower undertone was noted on feeders under 700 lbs., while those over 700 lbs. were down $3-5. Only one lot of benchmark steers sold, averaging $139.34.
Kansas: The Winter Livestock Auction sold fewer cattle last week compared to the week before, and prices were lower. Heavy feeder steers were down $3-5 and heifers were down $2-3. Six-weight heifers were the exception, trading up $4. Calves were down $3-6 on a light test. One lot of #1, 782-lb. yearling steers averaged $135.56.
Montana: The Public Auction Yards sold almost three times as many cattle last week as the week before. Feeders were too lightly tested in the prior sale for an accurate market test. Two lots of benchmark steers sold ranging from $141-149.
Nebraska: Prices were significantly lower at the Huss Platte Valley Auction last week. Feeder steers over 800 lbs. sold down $8-13 and heifers over 700 lbs. sold down $5-9. The declines were blamed on the CME cattle board movements since the week before. Two lots of #1, 7-weight steers sold between $143.50-154.75.
New Mexico: Sales volumes were fairly steady at the Clovis Livestock Auction, but prices were far lower. Feeders were down $7-10 with 6-weight steers trading $15 lower. The losses were again blamed on the futures market movements, but the auction report also noted the quality was lower than the week before. No benchmark steers sold, but #1, 6-weights ranged from $135.50-144 and 8-weights averaged $128, while a couple lots of medium and large 1-2 class 7-weight steers ranged from $125.50-137.50.
Oklahoma: Feeder steers sold $5-8 lower last week at the OKC West-El Reno sale. Heifers were down $4-6 and feeder calves were down $7-10. Several lots of benchmark yearling steers traded, ranging from $129-144.
South Dakota: The Hub City Livestock Auction had few comparable sales. The best test was on steers between 750-950 lbs., which were steady. Comparable weight classes of heifers were down $4-6. Feeder calves were not tested. Several lots of benchmark steers sold between $142-157.
DTN’s Livestock Analyst John Harrington called the late-week gains made in the feeder futures “little more than corrective short covering.” Like live cattle contracts, Thursday saw triple-digit gains following three days of losses. However, both the May and August feeder cattle contracts lost about a net $5 compared to the May 11 settlements. The May contract settled Thursday at $133.10 and the August contract settled at $138.72. — Kerry Halladay, WLJ editor
