Monday Markets
Fed cattle trade was nonexistent today as most in the west are enduring a large snowstorm. However, futures markets were active, with all contracts gaining some ground and putting a positive tone on this week’s cash trade. Boxed beef markets are continuing their downtrend, with choice losing a buck to $224.77 and select down to $218.05. The Choice/Select spread is only $6.72 as the calf feds come to market.
Slaughter was off to a slow start with 113,000 head passing through plants today, and we understand one plant is down for scheduled maintenance. Last week’s slaughter was estimated to be 647,000 head. Negotiated cash sales totaled 92,625 head for last week with a weighted average price of $113.96 live and $180.00 dressed. Feeders are getting frustrated with the market stuck in the same trading range for six weeks. There were 45.500 head of formula grid cattle priced at $183.84 with an average weight of 866 lbs.
With futures cooperating and last week’s feeder cattle movement, cattle feeders may be able to push the market higher. Significant beef demand is just around the corner as consumers are getting their grills ready.
ShayLe Stewart at DTN reported that “Live cattle futures are having a good day seeing modest support boost the entire complex higher. April live cattle are up $0.40 at $119.40, June live cattle are up $1.07 at $121.50 and August live cattle are up $0.80 at $120.57. The best thing that could happen to the cattle market this week is if cash prices see a spike and carcass weights continue to trend lower. With last week’s negotiated movement, quite sizeable (92,625 head) feedlots are stuck in a hard spot, fighting themselves and the market at the same time. Last week they needed to move some cattle in order to keep their show lists current. But seeing packers buy over 75 percent of last week’s movement for delivery in the next two weeks means one thing, packers needed the cattle and feedlots could have gotten higher prices.
Hopefully, this week’s market can finally push the market past its stagnant holding range of $113 to $114 live and $178 to $180 dressed. Show lists this week are lighter all throughout the major feeding states; Nebraska and Colorado are lower, while Texas and Kansas are only mildly lower.”
Compared to last week, steers and heifers sold unevenly, $2.00 lower to $2.00 higher. Good demand for lightweight cattle to background and the supply of these light cattle is tight. When numbers of grazing cattle show up at the auction, the competition is fierce to own them. A much greater supply of heavier, backgrounded steers and heifers exist nationwide as producers have worked years upon years to push weaning weights higher and higher as cow-calf producers get paid on weight.
Cattle feeders watch the April contract very closely, and that is normally the high of the year, when supplies of market-ready cattle are the tightest, right before the calf-feds start coming in May to June. Feed costs are much higher compared to a year ago. For instance, cash corn
in Southwest Kansas was $3.45 to $3.65 last year; $5.69 to $5.84 this year. Quite a stark contrast when you look at over $2.00 per bushel more and concern of more losses weighing on the feeder cattle market. Flesh condition is of utmost importance, especially in a challenging market. Buyers are willing to give much more for a green one than those that have been pushed too hard.
Stewart also said, “Nearby corn prices are seeing a modest rally, but as most corn contracts trade mildly weaker, the feeder cattle contracts seem confident in their morning rally. March feeders are up $0.60 at $136.95, April feeders are up $0.75 at $143.97 and May feeders are up $1.02 at $149.40. The biggest win for the feeder cattle contracts would come if the cash cattle market could trade higher. That, in and of itself, would provide an incentive for cattle buyers to buy some of these feeder cattle being offered at sales and confidence that they will be able to sell them later down the road for somewhat of a profit. But as the market sits with sorry fat cattle prices and lofty cost of gains, feeder cattle buyers are leery of over-extending their position.”
Oklahoma: Oklahoma National Stockyards offered 9,000 head today, and they reported Feeder steers $2.00-$3.00 higher. Feeder heifers mostly steady to $3.00 higher, advance on 600 lbs. Heifer calves steady to $3.00 higher. Demand moderate too good for feeder cattle but remains very good for grass cattle—quality average to attractive as we continue to see large drafts of cattle off wheat or winter pasture. Benchmark steers weighing 783 lbs. averaged $137.24 today. — Pete Crow, WLJ publisher
