Markets were lackluster for yet another week. Futures remain disappointing, cash trade has been steady to lower for the past several weeks and slaughter numbers continue to be an issue.
Live cattle futures were down another week. The October contract lost $2.65 over the week to close at $129.57, and the December contract lost $2.90 to close at $125.72.
“Although the last day of the month and third quarter is bringing about some additional position-taking, the focus on growing market weakness heading into the last three months of the year is evident from a fundamental and technical perspective,” remarked Rick Kment, DTN contributing analyst, in his Thursday morning comments.
“The overall lack of cash market support—which typically starts to develop during September—is creating concern that longer-term gains may not follow traditional seasonal patterns through the rest of the year.”
Through Thursday morning, 70,000 head had traded on the negotiated fed cattle market—an improvement from the previous weeks. However, prices have stayed generally steady at the $122-124 mark. Only 63,112 head traded on the negotiated cash basis for the week ending Sept. 26. Live steers averaged $123.60, and dressed steers averaged $196.45.
The national weekly direct beef type price distribution for the week of Sept. 20-27 was the following on a live basis:
• Negotiated purchases: $123.69.
• Formula net purchases: $127.14.
• Forward contract net purchases: $127.57.
• Negotiated grid net purchases: $128.55.
On a dressed basis:
• Negotiated purchases: $196.43.
• Formula net purchases: $202.67.
• Forward contract net purchases: $197.55.
• Negotiated grid net purchases: $203.43.
Slaughter through Thursday totaled 473,000 head, a few thousand head short of usual levels. Cassie Fish, market analyst in The Beef, surmised the reduced capacity was due to a couple of plants being dark.
“News that another plant is thought to be cleaning coolers this week, in addition to one major plant already scheduled, will bring that total to two and lower this week’s slaughter expectations to 640K, about the same as last week,” she said.
In addition, there were rumors that a third plant had an issue that caused it to cease operations Wednesday, causing smaller slaughter numbers for that day. Slaughter through Sept. 24 is estimated to be 641,000 head, while actual slaughter for the week ending Sept. 18 totaled 649,602 head.
Boxed beef prices continue to fall, and the Choice cutout has officially come down under $300 after a long reign on top. The Choice cutout lost a little over $10 in a week to close at $294.98, and the Select cutout lost a little over $5 to close at $269.32.
Feeder cattle
Feeder cattle futures were unable to find any gains over the week. The September contract lost almost a dollar to close at $153.92, and the October contract lost over $4 to close at $152.55. The CME Feeder Cattle Index lost about 71 cents over the week to close at $153.78.
“October feeder cattle futures have now fallen over $17/cwt from contract highs set during the third week of August,” Kment said. “Technically speaking, the next major support level is May lows at $147/cwt, creating growing uncertainty of buyer support over the near future.”
Corn has traded generally sideways for the past few weeks, with the December contract up about 7 cents to $5.36, and the March contract also lost about 7 cents to close at $5.44.
“Feedlots will compete for dwindling supplies, leaving large differences operation by operation,” Kment remarked. “The larger commercial operations will stay full while some smaller owner/operator feedyards may struggle to hold numbers steady. Some Midwest farmers may choose to sell corn and leave the feeding of cattle to someone else.”
Kansas: Winter Livestock in Dodge City sold 1,429 head Wednesday. Compared to the previous week, feeder steers and heifers 700-975 lbs. sold steady to $2 higher. Steer and heifer calves 400-700 lbs. sold steady. Benchmark steers averaging 775 lbs. sold between $155.75-156.25, averaging $155.98.
Missouri: Joplin Livestock in Carthage sold 5,000 head on Monday. Compared to the previous auction, feeder steers traded steady, and feeder heifers traded steady to $4 lower. Benchmark steers averaging 719 lbs. sold between $150-163, averaging $154.60.
Nebraska: Tri-State Livestock in McCook sold 2,525 head on Monday. Compared to the previous auction, steers and heifers were steady to $8 higher. Benchmark steers averaging 737 lbs. sold for $165.
New Mexico: Cattlemen’s Livestock in Belen sold 1,104 head on Saturday. Compared to the previous auction, steer and heifer calves sold $4-5 higher. Feeder steers and heifers also sold $4-5 higher. A group of steers averaging 617 lbs. sold between $145-160 and averaged $147.96.
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 6,200 head on Monday. Compared to last week, feeder steers sold unevenly steady. Feeder heifers were $2-5 higher. Steer and heifer calves sold unevenly steady. Benchmark steers averaging 723 lbs. sold between $147-158 and averaged $153.18.
South Dakota: Sioux Falls Regional Cattle in Worthing sold 980 head on Monday. Compared to the previous week, feeder steers and heifers sold unevenly steady. Benchmark steers averaging 731 lbs. sold between $144-150 and averaged $146.34. — Anna Miller, WLJ managing editor
