Cash fed trade got started earlier in the week than usual, but it didn’t come to much by close of trade last Thursday. By then, only 10,470 head had been confirmed sold at mostly $110 live, roughly steady with the prior week’s $108-111 live prices. Market watchers expected the bulk of trade was holding off until after the Friday afternoon release of the October Cattle on Feed report.
“Estimates for the report are on feed Oct 1. 104.7 percent, placements during Sept. 107.5 percent, and marketings during Sept. 102.6 percent with one less marketing day this year compared to last,” reported Troy Vetterkind of Vetterkind Cattle Brokerage last Thursday morning.
He also predicted the live cattle futures would “chop about” until the Cattle on Feed report dropped to provide some guidance. The near-term contracts generally lost at least $1 over the course of the week.
The October contract settled last Thursday at $111.17 compared to its prior-Friday settlement of $112.82. The December contract settled Thursday at $116.15, compared to $117.12 on the prior Friday.
“Cattle futures have been under pressure for the last couple of days as liquidation in October live to avoid deliveries and roll pressure keeping some selling hanging over the market,” commented Vetterkind, noting that the futures markets started last week overbought. “I wouldn’t expect to see October live to get much below $110, which should put some support under the December live at $115.”
Cutout values staged an unexpected pirouette last week. After the prior week’s steady gaining in the Choice cutout, last week saw a sizable drop on Wednesday that was just as quickly recouped in Thursday’s trade alone. At $199.57 by close of trade, Choice gained a net $1.35 over the course of the week. The Select cutout gained a net 71 cents with $190.76 by close of trade Thursday.
“The Choice beef cutout is currently up 8 percent compared to a year ago,” Cassie Fish of the Beef Report noted last Monday when the price stood at $198.81.
“The cutout is expected to continue to slowly gain value seasonally, reaching a [fourth quarter] high ranging anywhere from $205-215, depending on demand.”
She projected that this demand would be led by holiday rib orders. She was not alone in this thought.
“One should expect to see aggressive retail beef promotions during the holiday period, given maximized retail beef margins,” said Andrew Gottschalk of Hedgers Edge last Wednesday morning.
“As long as the economy creates more employment and higher wages, beef and meat demand will remain positive. We remain ‘bullish’ on the U.S. economy and expect other developed and emerging economies to continue to gain upside momentum.”
He added that, “The greatest risk to the market is a buildup in front-end fed cattle supplies, leading to a backlog—if aggressive marketings are not maintained.”
Ahead of the Cattle on Feed report’s release, Fish was confident it would show such marketings.
“Friday’s USDA Cattle-on-Feed report will confirm excellent marketings occurred in September as well as larger placements than a year ago,” she opined Monday morning.
Feeder cattle
“I have been impressed by the strength of feeder cattle and calf markets through the fall. But what do the technicals say?” asked Dr. Stephen Koontz, professor of agricultural and resource economics at Colorado State University.
“Very clearly sell,” was his answer.
“My interpretation of the feeder cattle futures rally through most of late August and early September was that it was driven by a strong cash calf and feeder cattle market pricing in a lot of the cheapening feed market. It is possible that all of this has run its course and traditional seasonal weaker calf prices are in the works.”
This possibility seemed to be born out in the feeder auctions last week. While prices on medium and large 1-class (#1) steers weighing between 700-800 lbs. were still quite strong, many sales reported declining prices across different classes of feeder cattle.
Colorado: The La Junta Livestock Commission Company sold more cattle last week than the week before. Light steer calves were called unevenly steady with prices ranging from down $3 to up $5. Heifer calves were called up $3-5 with occasional steady exceptions. Yearling feeders over 700 lbs. were steady. A group of 17 head of benchmark calves brought $146, while a group of 79 benchmark yearlings averaged $153.36.
Missouri: Even at 4,747 head sold, the Joplin Regional Stockyards sold fewer cattle last week than the week before. Steers of all ages were called steady to up $3. Heifer calves were down $3-5. Number 1, 7-weight yearling steers ranged from $152-164 while calves ranged more narrowly at $145-146.
Nebraska: The Sheridan Livestock Auction Co.’s sale volume more than quadrupled last week to 5,350 head, but it made comparisons difficult. Steers were described as sharply higher with light calves down $1-2. Benchmark steers of all ages ranged from $163.75-176.
New Mexico: Over 4,150 head of cattle, mostly feeders, sold last week at the Clovis Livestock Auction. Light steers were mostly a modest $1 higher, but instances of $10 higher were seen on especially light, long-weaned calves. Heifers were called steady to weak except for 4-weights which were down $3. Demand was called good to very good for weaned calves. Number 1, 7-weight calves sold for $125-138, while a group of yearlings averaged $143.72.
Oklahoma: The Oklahoma National Stockyards sold 8,757 head last week with feeder steers seeing steady to $2 higher prices. Heifers were mostly $1-4 lower. Steer calves were steady to up $3 while light heifer calves were steady and heavier heifer calves were down $4. Several large groups of #1, 7-weight steers sold between $152-165 for yearlings and $143-147 for calves.
South Dakota: Prices on steers were erratic last week at the Philip Livestock Auction, ranging anywhere from down $8 to up $6 with no pattern of demand. Most weights of heifers were discounted by as much as $10, but heifers over 850 lbs. were up $2-4. Benchmark steer prices ranged from $164-169, inclusive of calves.
Wyoming: Receipts were up at the Riverton Livestock Auction last week. Steers ranged from up $9 to down $11, with most being called a weak steady. Heifers were split with calves and replacement-quality yearlings selling $3-9 up, with instances of up $15, while feeder yearlings were down $6-10. Fourteen head of #1, 721-lb. steer calves averaged $153.20.
Feeder cattle futures also lost ground last week. Compared to the prior-Friday close, the October settlement last Thursday saw a net decline of 90 cents at $153.15. The November contract lost a net $2.23 with $152.77. Most of the losses were realized in Tuesday’s trade, with the contracts trying to recover on Wednesday and Thursday. — Kerry Halladay, WLJ editor
