Monday markets
The CME was able to shake off the bearish Cattle on Feed report and find a way to trade higher. The October live cattle contract was 37 cents higher to $107.95 and the December contract was up 25 cents to $111.65. There was no cash trade today. Just 36,600 head of formula cattle moved; they weighed 895 lbs. and dressed out at $164.68.
Last week’s cash trade was excellent with 124,791 head sold. Of that, 91,672 head are committed for delivery in the next two weeks while the remaining 33,119 head are for delivery in the following 15 to 30 days. Live prices were mostly $105 and $165 dressed. Last week’s slaughter was 651,000 head—1,000 head more than the same week last year. Today’s slaughter is estimated to be 118,000 head.
Beef prices fell today, with many market analysts thinking the recent rally in beef prices may have been premature. Choice lost $1.62 to $217.72 and Select was down 56 cents to $206.42 on 148 loads.
Cassie Fish said today in The Beef that “The bearish placement figure reported at 109 percent of a year ago in Friday’s USDA COF report sent CME cattle futures lower on the opening. But optimism for rising cash cattle and boxed beef prices over the next 60 days continues to inspire bottom pickers and a rally quickly ensued.
“In a different time, the market fading a bearish report might be considered bullish,” Fish said. “But this year is unlike any others, and though bottom pickers exist, there are plenty of other seasoned traders who are eyeing the cattle market with concern rather than optimism. The impact of the pandemic on the distribution of the industry’s fed cattle inventory continues to be significant and will influence the market well into next summer.
“Next, the record number of cattle on feed for any Sept. 1 will be outpaced each month through the fall and by Nov. 1, there will be well over 12M cattle on feed, potentially setting Q1 up for the largest number of market-ready fed cattle since 2012,” Fish continued.
“So, the 60-day bullish fed cattle supply outlook is sandwiched between two bearish supply pieces of data. Couple that with record weights, and the bullish advantage is lessened. There is a very high probability cash cattle and boxed beef prices rally between now and Thanksgiving. But the up may be seen more on cash values than futures, which are already carrying sizeable historical premiums to cash.”
Feeder cattle
ShayLe Stewart at DTN reports from the CME: “Feeder cattle market is pulling attention toward the nearby contracts as October feeders are up $0.60 at $140.927, November feeders are up $0.95 at $141.10.and January feeders are down $0.32 at $139.15. The market would like to rally confidently and throughout the entire complex but with the corn market rallying $0.02 to $0.04 per bushel, feeder cattle contracts are hesitant. With feed becoming an issue throughout the country it wouldn’t be surprising to see more calves and feeders hitting the marketplace as early as next week to kick off the official start of the October fall run.”
Joplin Regional Stockyards in Carthage, MO, sold 6,100 head today and reported, compared to last week: steers under 750 lbs. and heifers under 700 lbs. $3-6 lower, steers over 750 lbs. and heifers over 700 lbs. steady. Demand and supply moderate. Benchmark feeder steers weighing 761 lbs. averaged $144.60.
National Livestock Auction in Oklahoma City, OK, sold 5,700 head today and reported, compared to last week: Feeder steers are selling $2-3 higher, feeder heifers steady to $1 lower. No trend available for steer or heifer calves due to limited comparable offerings early rounds. Benchmark feeder steers weighing 785 lbs. averaged $142.40.
The folks at the Cattle Report said today, “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 are higher this week and much will depend on the success of fed cattle owners to advance prices. Large placements patterns continue, threatening fed prices in the coming new year. The heaviest placement weeks of the year are in front of us. The auction receipts and feedyard placements will be closely watched for the next 60 days. Basis levels will widen during this period.” — Pete Crow, WLJ publisher
