Fed cattle trade turned active last Wednesday afternoon and feeders moved the market $2-3 higher. Live prices ranged between $103-$109 and dressed prices ranged between $165-169. Northern Plains feeders were holding out for $170. A total of 56,084 head traded through Wednesday afternoon. On Thursday, 24,900 formula cattle weighing 890 lbs. were priced at $167.26.
Futures markets were trending higher, but in a very narrow range last week. The October live cattle contract lost 42 cents last Thursday to settle at $108.52 and the December contract lost 52 cents to $111.82. Feeder cattle were a bit erratic, not really knowing where to go after the most recent Cattle on Feed report, which showed August placements up 9 percent from a year ago. October’s feeder cattle contract lost 42 cents to settle at $140.92, November was down 80 cents to $141.25 and January lost 75 cents to close at $139.55. The latest Feeder Cattle Index was $142.38.
Boxed beef values have been stable with the Choice cutout at $218.98 and Select trading at $207.62 on 147 loads. Beef exports have picked up over the past few weeks with total exports two weeks ago at 24,700 metric tons, 37 percent higher than the week before. The three top export countries were Japan, South Korea, and China.
Last week’s estimated slaughter was 650,000 head and carcass weights were coming down. “More good news for the cattle feeding industry is that steer carcass weights actually dropped 1 pound for the week ended Sept. 19 to 919 pounds from the prior week and is now 16 pounds over the five-year average,” said Cassie Fish, market analyst in The Beef. “This and declining Choice grading in Texas and Kansas are indications the industry is becoming more current. The actual slaughter that week came in at 648k head, 3k more than the estimate and a positive.
“Boxed beef values bottomed uncharacteristically in mid-September at $215.05, well above the anticipated $210 low and two weeks early. The Q3 cutout low this year was made in late July at $201.11, a level that probably won’t be seen again for quite some time. This sets the boxed beef market up for a likely higher high in December than was scored in August, which was $231.54. Right now, the rib is up $13 on the week and is leading the charge. Select middles have been very strong, possibly linked to the reopening of the global cruise industry which has been at a dead stop,” Fish said.
Rick Kment, DTN analyst, said, “Sharp losses in feeder cattle futures Wednesday sparked renewed market uncertainty that further pressure may develop during early October. All nearby feeder cattle contracts posted triple-digit losses, quickly moving away from two-week highs, and potentially establishing significant resistance levels near $144 per cwt. Although losses in live cattle trade were not as aggressive as feeder cattle moves, the underlying pressure in the complex is creating some concerns about further unchecked buyer support moving into the market soon.
“Although traders will continue to focus on supply levels slowly decreasing through the next six months, uncertainty about demand growth through the end of the year still weighs on the overall potential support in live cattle trade over the next several weeks. Because it’s a new month and quarter, early trade is expected to remain mixed in a narrow-to-moderate range, with the focus split between follow-through market adjustments and short-covering following recent losses.”
The folks at the Cattle Report reported, “Stocker and feeder prices are adjusting to the larger supplies currently moving into mostly full feedyards. This will pressure the basis through October as peak supplies are brought to market. Prices are higher this week and much will depend on the success of fed cattle owners to advance prices. Large placements patterns continue, threatening fed prices in the coming new year. The heaviest placement weeks of the year are in front of us. The auction receipts and feedyard placements will be closely watched for the next 60 days. Basis levels will widen during this period.
“The role of the Coronavirus Food Assistance Program on the replacement markets should not be overlooked. The large payments have healed much of the financial damage to beef producers and given them the necessary financial clout to move back into the replacement markets with new hope for profits next year. This has fueled price improvements in stocker and feeder cattle that now have prices topping last year.”
OKC West Livestock Auction in El Reno, OK, sold 5,164 head Wednesday and reported compared to last week: Feeder steers sold $1-$4 higher, with several high quality lots on offer. Feeder heifers sold mostly steady with a few trades $2 higher. Demand was good. Steer and heifer calves sold steady to weak. Demand was moderate. Benchmark steers weighing 777 lbs. brought $140.20.
Winter Livestock Auction in La Junta, CO, sold 3,746 head last week and reported compared with the prior Tuesday: Steer calves sold uneven. Steers under 400 lbs. sold mostly steady; 400-450 lbs. sold $5 lower; 450-600 lbs. sold steady to $2 higher, with instances of $5 higher on 550-600-lb. weaned calves; and over 600 lbs. sold steady to $2 lower. Heifer calves sold uneven. Heifers under 450 lbs. sold $3-5 lower; 450-500 lbs. sold $3-5 higher; and over 500 lbs. sold mostly steady. Yearling feeder steers and heifers were lightly tested. Slaughter cows sold $1-2 lower. Slaughter bulls sold $2 lower. Benchmark steers weighing 756 lbs. averaged $143.
Santa Teresa Livestock Auction in Santa Teresa, NM, sold 929 head last week and reported compared to the week prior, steer calves weighing under 600 lbs. sold $5-7 lower, with the exception of three-weights, which sold steady. Steer calves and yearlings weighing over 600 lbs. sold $2-$3 lower. No comparison on heifers. Trade was active and demand good. Supply consisted of steers and spayed heifers weighing 300-800 lbs. All cattle traded were of Mexican origin. Benchmark steers weighing 701 lbs. averaged $133.50. — Pete Crow, WLJ publisher
