Monday markets
Futures markets dragged the market down after what many see as a bearish Cattle on Feed report. Packers have been aggressive cash buyers over the past two weeks, purchasing over 130,000 head. The call for this week is steady to $2 higher money. Packers priced 40,800 head through formulas and grids today and paid $167.37 on cattle that weighed 884 lbs. The Cattle on Feed report showed placements into feed yards up 11 percent over last year and marketings were just 1 percent lower, cattle on feed was two percent higher.
ShayLe Stewart, DTN livestock analyst, said, “Live cattle contracts are in the same mindset that feeder cattle contracts are, and with traders unwilling to risk taking the market higher, a downward trade is expected for all of Monday.
“October live cattle are down $0.62 at $107.92, December live cattle are down $.95 at $110.82 and February live cattle are down $1.15 at $113.47. Feedlot managers are unshaken by Friday’s Cattle on Feed report, as asking prices are anticipated to be higher again this week. As packers continue to commit to large strings of fat cattle, feeders look at the market and see an opportunity that’s available here and now and no reason to cower into pricing cattle lower thus far. New show lists appear to be about steady in Nebraska/Colorado, somewhat lower in Kansas, and lower in Texas.”
Beef markets were again stronger with the Choice boxes moving $1.53 higher to $227.47 and Select $2.26 higher to $211.25 on 112 loads.
Feeder cattle markets took a beating at the CME with August feeders loosing 95 cents to close at $142, September lost $2 to $142.85 and all the deferred contracts were off. The National Feeder Cattle Summary reported that compared to last week, steers and heifers sold uneven, $1 lower to $2 higher. Yearling cattle are in demand this week and some calves have started to show at auctions this week.
There are still plenty of yearlings on offer at sales this year due to the elongation of the marketing period after producers were more inclined to wait to sell after this spring’s auction price decline.
Breakevens on fed cattle coming out of feedyards at today’s prices are tempting producers to make another turn on feeding those yearlings. At Sheridan Livestock Auction (Rushville, NE), six loads of yearling steers weighing 955 lbs. sold at $146.10; near $1,400 per head.
National Stockyards in Oklahoma City, OK, sold 8,500 head today and compared to last week feeder steers and heifers were trading $3-5 lower. Steer and heifer calves are selling $4-8 lower with most declines being on light weight calves. Demand was light to moderate. CME live and feeder cattle contracts opened sharply lower this morning. Benchmark steers weighing 755 lbs. had a weighted average of $143.10.
Cassie Fish at the Beef remarked today, “Technically futures look bearish with some contract months reaching the 40-day moving average. Fundamentally, the market also looks toppy. Seasonally boxed beef values top this week and today’s higher quote was on light volume has the feel of a blow-off. The Choice was up $1.37 at $227.31.
“Packers took on huge inventory last week, buying 130k head of negotiated cattle on the heels of last week’s 122k head. Last week’s 5-area average price for steers was $106.59 up $1.53. Adding the negotiated plus the formula and forward contract inventory packers own more cattle than any other time this year. This gives the packers leverage. Cash cattle prices this week will be no better than steady.” — Pete Crow, WLJ publisher
