The late-week turnaround in the futures could not save the overall market down trend last week.
Even though the near-term futures contracts made triple-digit gains on Thursday, the futures were still down compared to the prior Friday. In the live contracts, June settled at $110.48 and August at $107.95, down $1-2. The near-term feeder futures both lost over a net $3, with May settling at $134.23 and August at $143.33.
“CME cattle futures are going nowhere fast, unable to stage a sustainable corrective rally just yet, but bubbling up to higher on the day more and more often,” commented Cassie Fish of the Beef Report on Thursday.
“To say there is a lot of bad news priced in futures is to state the obvious. In the meantime, this week cattle feeders have hit bids and sold cattle as cheap as $115 in the 15-30-day window while the average for 1-14 days is just a hair under $117. In Nebraska, $117 was paid today by a major.”
By close of trade Thursday, just over 59,000 head of negotiated cash fed cattle had been confirmed sold. Prices on Thursday ranged from $114-118 (avg. $116.78) live and $184-186 ($185.41) dressed.
“It is likely that live trade in the South and North may be wrapped up for the week, with dressed business still needing to be done,” commented Rick Kment, DTN analyst, on Thursday afternoon.
These prices were $2-3 lower than the prior week, with expectations for lower dressed trade on Friday and into this week.
“The next level of cash price support is $108-111, followed by $105,” noted Andrew Gottschalk of Hedgers Edge. “Trade at $108 would constitute an average price decline from the winter/spring high ($128) to the summer/fall low. Initial resistance is $124. A positive (stronger than expected) fed cattle cash basis continues to be the main price driver at this time.”
Cash feeder cattle also sold down last week. Averages on medium and large #1 steers weighing between 700-800 lbs. were still in the $140s, but most auctions reported feeder prices being lower. Despite this, demand was generally called good across the surveyed auction markets.
California: The Cattlemen’s Livestock Market sold almost 1,600 head last week. All classes of feeder cattle were called steady. Despite this, #1, 7-weight steers sold notably higher at $130-150.75. This was a $10 upward shift of the entire range compared to the week before.
Colorado: The Winter Livestock auction in La Junta sold just slightly over 1,000 head of feeders last week, roughly a third of what sold the week before. There were too few comparable sales for a market trend, save for feeders over 800 lbs., which were called steady. A single lot of benchmark steers, averaging 719 lbs., sold for $140.
Kansas: The Winter Livestock auction in Pratt sold 6,400 head of feeders last week, close to three times the volume sold the week before. It was again difficult to find a market trend with steers over 750 lbs. trading up $2 to down $5. Seven-weight heifers were called $2-3 higher. Prices on benchmark steers ranged from $135-151.50.
Missouri: Over 3,600 head of feeders sold last week at the Joplin Regional Stockyards. The volume was slightly higher than the prior week, but prices were a weak steady to down $4 on steer calves and yearling heifers in particular. Two lots of #1, 7-weight steers sold between $134-144.
Montana: Just under 3,200 head of feeder cattle sold last week at the Public Auction Yards, compared to the 272 head the week before. The only test of feeder prices came on steers weighing 700-749 lbs., which were steady to down $5. Quality was called average to attractive with moderate to good demand from buyers. Two lots of benchmark steers sold between $135-152.
Nebraska: The Valentine Livestock Auction sold just under 1,100 head of feeders last week, a fifth of the volume that sold the week before. No market trend was available. Demand was called moderate to good. One lot of seven head of 768-lb. yearling steers averaged $140.25.
New Mexico: The volume of feeder cattle sold was steady last week at the Clovis Livestock Auction, but the prices were $2-3 lower on both steers and heifers of all ages. Benchmark steers sold between $121 for a small lot of Mexican feeders to $140.
Oklahoma: The OKC West-El Reno sale sold over 10,400 head of feeder cattle last week, up from the almost 6,300 head sold the week before. Prices on steers were down $3-6, mostly $5-6, and heifers were down $5-7. Demand was called light to moderate. The decline was blamed in part on the sharply lower CME October live contract’s light demand. Prices on #1, 7-weight steers ranged from $126-146, inclusive of a small lot of un-weaned calves.
South Dakota: The Hub City Livestock Auction sold 3,075 head of feeders last week, down somewhat from the prior week’s 3,739 head. The best test was on steers over 800 lbs., which were steady to up $1. Demand was called good. Prices on benchmark steers ranged from $149.50-154.
Last week’s slaughter rate was expected to challenge 670,000 head, though it is expected to slow ahead of Memorial Day as packers work through captive supplies.
“This reduction should provide some temporary support to the composite beef cutout,” commented Gottschalk. “Longer term support for the composite beef cutout is $207-211.”
By Thursday, the Choice cutout had fallen to $219.56 (-$1.55) and the Select cutout had eeked slightly higher at $208.88 (+42 cents). — Kerry Halladay, WLJ editor
