Fed cattle trade was very slow early in the week; futures markets were inching their way higher, giving cattle feeders more resolve to hold out for higher money. It looks like we will start seeing more normal cattle trade, which means Thursday and Friday is when the bulk of cattle will change hands. There has been more negotiated cash trade in the Southern Plains as the industry tries to fix its own lack of cash trade.
Rick Kment at DTN reported that “Cash cattle trade remained extremely light Wednesday with a few deals reported at $108 to $108.50 live basis and $169 per cwt dressed. Generally, the reported trade is seen $1 per cwt higher than last week, but there is enough business in the books to establish a good market trend for the week at this point.
“It is likely both sides will become more active over the next couple of days, with feeders unlikely to back away from current market momentum and push for additional gains with elevated asking prices. Although significant volume may develop Thursday, there is the possibility active trade could be split between the next two days; as the end of the week moves in boxed beef values could have a significant role in supporting cash cattle prices.
“The cash trade is not only focused on weekly movement, but the ability to establish strong additional gains during the first week in October could easily set the tone and create expectations of further moderate to strong gains in weeks to come.
“Strong gains seen Wednesday in December live cattle futures have quickly changed the short-term tone of the market, which struggled to gain support and hold short-term support levels of $111 per cwt during early week trade. With spot-month contracts closing at $113.10 per cwt, traders are testing September highs and nearby resistance levels of $113.12 per cwt at opening bell. A firm move over these levels would open the door for further noncommercial buyer support moving into the market.
“Feeder cattle futures were the most watched livestock contract Wednesday, reversing the $6 per cwt price slide and pulling back from early morning losses Wednesday. The ability for buyers to step into the complex and post even narrow gains early Thursday morning could quickly reflect a major shift in market direction and bring about increased late-week buyer support.”
Boxed beef values have been treading water this week with the Choice cutout trading in the $216 and $217 area and Select at $203 on 162 loads. This is historically high for early October because of strong middle meet demand.
“For the week ended Sept. 26, the actual slaughter was reported 4k head larger than the estimate at 655k and the fed slaughter that week was 520k head, 5k above a year ago. All constructive for the market. Carcass weights for the same period for steers were up five pounds at 924 pounds, tied for the highest ever for that week,” said Cassie Fish, market analyst in The Beef.
Feeder cattle
This record beef production is being absorbed at the second highest cutout value in history, which speaks volumes about demand. And it is demand that is inspiring the bigger slaughters, which will enable the industry to work off any remaining burdensome supplies.
According to the National Weekly Feeder and Stocker Cattle Summary, compared to last week, steers and heifers sold uneven, $2 lower to $2 higher.
“Demand remains good for yearling cattle with light to moderate demand for fresh calves. This time of year, true yearlings are in very short supply and buyers are willing to pay handsome prices for this type of cattle. Large supplies of calves are on the horizon, even though not many come direct, (videos and auctions bulk of them) buyers are still seeking these calves to make yearlings or push hard to April fat cattle market for the big front-end kind,” the report read.
“Bawling and unweaned calves continue to see discounts and are much less desirable to buyers as typical for this time of year. Early fall temperature swings make these cattle very high health risks which will remain the case until a hard frost comes and the populations in the hospital sick pens will drop. Buyers are quite willing to pay premiums for cattle if producers invest time in them and provide a documented health program.
“Drought conditions continue to spread nationwide with almost 62 percent of the continental United States in some sort of drought status. As the average first frost date nears, hope for stockpiling pastures is fading quickly.”
The trend line for December corn has been sharply higher to $3.87, and is taking a toll on feeder cattle values. October feeders were down 45 cents to $138.05, November feeders are down $1.42 to $136.45 and January feeders were $1.35 down at $134.97. Feeder cattle futures have backed off by $6 since the recent high around $142. The deferred contracts are taking a beating. The interest in the cattle contracts has simply dwindled as traders are looking at higher feed costs which will have an impact on the fall run of calves.
Joplin Regional Stockyards in Carthage, MO, sold 5,082 head and reported compared to the week prior, steer calves sold steady to $4 higher and yearlings unevenly steady. Heifers were weak to $5 lower with a few lightweight heifers trading as much as $9 lower. Benchmark steers weighing 776 lbs. averaged $142.86.
OKC West Stockyards in El Reno, OK, sold 6,623 head and reported, compared to two weeks ago, feeder steers traded mostly steady. Feeder heifers over 800 lbs. sold mostly steady, and heifers under 800 lbs. sold $2-3 lower. Demand was moderate to good. Weaned steer calves traded $1-3 higher. Heifer calves sold $2-4 higher. Demand was good for weaned calves with shots. Quality was much improved from the week before with several strings of ranch-raised weaned calves on offer. Benchmark steers weighing 782 lbs. averaged $141.26.
Bassett Livestock Auction in Bassett, NE, sold 3,960 head and reported compared with two weeks ago 850-1,000-lb. steers traded steady to $4 higher; 800 and 900 lbs. spayed heifers traded unevenly steady; 900-lb. heifers traded $3 higher. Benchmark steers weighing 779 lbs. averaged $148.22. — Pete Crow, WLJ publisher
