Thursday markets
Cattle markets were slightly stronger this week even though no serious trade has occurred. Fed cattle were $1 higher live and $2-3 higher on dressed trade; $104.16 and $164.15 respectively. Slaughter has been good with packers maintaining 120,000 head per day slaughter. As of today, 482,000 head passed through.
Packers priced 27,300 formula cattle weighing 908 lbs. and priced at $167.27 Thursday.
ShayLe Stewart, DTN livestock analyst, reported, “Feeders have yet to pull the trigger and let trade begin, and it wouldn’t be surprising if packers must work on those prices a little bit more before feeders become interested. Feeders are going to push packers using stronger boxed beef prices as a talking point and know full-heartedly that their show lists are current so there’s room to roll cattle over to the next week if the need arises. Asking prices are around $106 to $108 in the South, and $167 plus in the North.”
Futures markets were slightly stronger with the October live contract up 87 cents to $108.02 and December up $1.07 to $112.27, which should help feeders price cattle higher. Feder cattle contracts were all higher with September 45 cents higher to $142.45 and October up 74 cents to $142.27
Negotiated cash trading has been slow on light to moderate demand in Kansas, Nebraska and the western Corn Belt. In Kansas, a few live purchases moved at $105. In Nebraska, a few dressed purchases moved at $165. In the western Corn Belt, a few live and dressed purchases moved from $104-105 and $165, respectively. In the Texas Panhandle negotiated cash trading was inactive on very light demand.
Beef markets have stabilized and should rebound into the holidays. Choice boxed beef was at $217.48 and Select was trading at $207.74 on 123 loads. The Choice-Select spread has narrowed to $9.74. Trim markets are stable with 90 percent lean trading at $219.53 and the 50 percent lean trim trading at $52.31.
Cassie Fish, market analyst of the Beef, isn’t happy with the CME: “The outlook is not without minefields. Tomorrow’s USDA Cattle-on-Feed report will be just one of many in the coming months that will show a record number of cattle on feed, with many of those cattle on feed concentrated in Texas, Kansas, and Colorado.
“Tensions are mounting around market volatility surrounding the upcoming U.S. Presidential election and Futures Commission Merchants are sending out warnings to traders that intraday margin calls may occur and are suggesting that traders prefund accounts with excess cash.
This comes at a time when the CME recently saw fit to expand the daily price limit for live cattle and feeder cattle futures, seemingly unaware or indifferent to the futures market impact on the physical side of the business. The original idea that agricultural futures were created as a risk management vehicle for producers has receded as the for-profit CME focuses on the managed fund community.
“One primary weakness in this decision is found in the CME’s lack of understanding of the relationship between live cattle prices and feeder cattle prices and the new limits being only $1 per cwt apart rather $1.50 as before. Feeder cattle futures are thinly traded and can easily lock the limit spilling over into live cattle futures as those trapped in feeders buy live cattle contracts to spread up. This will likely increase volatility.”
Feeder cattle
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 were higher this week and much will depend on the success of fed cattle owners to advance prices. Placements on the Cattle on Feed report, which comes out tomorrow, are expected to be 10 percent over last year.
OKC Auction in El Reno, OK, sold 6,954 head and reported feeder steers and heifers sold steady. Demand was moderate to good. Steer and heifer calves were lightly tested last week, however where comparable trades could be noted, steers traded $3-4 lower and heifer calves steady to $1 lower. Benchmark steers weighing 819 lbs. averaged $140.02. — Pete Crow, WLJ publisher
