Cattle markets reacted bullishly to the latest Cattle on Feed report. Cash cattle traded higher, futures were generally steady and slaughter is trending higher. Boxed beef prices are beginning their incline for the holidays—the Choice cutout is starting to move its way higher, and the Choice/Select spread is widening.
“This week, the market is finally making a move, but this time it is sustainable, as cash will continue to grind higher well into December,” remarked Cassie Fish, market analyst, in The Beef.
Cash trade throughout the week moved several dollars higher. Live steers sold between $125-128, averaging $126, and dressed steers traded from $196-200, averaging $199. By Thursday morning, a substantial amount of cash trade had taken place, about 96,000 head.
Live cattle futures traded higher throughout the week but then lost some momentum Thursday. By Thursday afternoon, the October contract was only about 50 cents higher than a week earlier at $124.50, and the December contract was about 75 cents higher to $130.32.
“Even though the futures market is trending lower, the live cattle market’s morale is still strong,” said ShayLe Stewart, DTN livestock analyst, in her Thursday comments. “This past week, cash cattle prices have jumped significantly, processing speeds have run aggressively, and Thursday’s export report showed positive figures as well.”
Cash trade through the week ending Oct. 24 totaled 78,746 head. This was down in volume compared to a week earlier, when cash trade totaled closer to 95,000 head. However, prices were about 60 cents higher, with live steers averaging $124.48 and dressed steers averaging $195.81.
The Fed Cattle Exchange listed 2,692 head for its weekly online sale on Wednesday. Of that, 394 head from Texas actually sold, between $125.50-125.75.
The national weekly direct beef type price distribution for the week of Oct. 18 to Oct. 25 was the following on a live basis:
• Negotiated purchases: $124.63.
• Formula net purchases: $126.27.
• Forward contract net purchases: $127.70.
• Negotiated grid net purchases: $126.62.
On a dressed basis:
• Negotiated purchases: $195.87.
• Formula net purchases: $200.34.
• Forward contract net purchases: $195.57.
• Negotiated grid net purchases: $199.14.
“For the first time in a very long time, the cattle market is beginning to behave in a manner that suggests that front-end supplies are getting cleaned up, and if kills stay elevated, leverage will continue to improve,” Fish said.
Slaughter through Thursday totaled 488,000 head, a few thousand head higher than the same time a week earlier. Projected slaughter for the previous week is about 661,000 head. Actual slaughter for the week ending Oct. 16 totaled 643,134 head.
Boxed beef prices traded generally steady but are headed higher. The Choice cutout gained a little over $4 to close at $284.89, and the Select cutout closed a little lower at $262.64. The Choice/Select spread continues to slowly widen and was $22.25 on Thursday.
Beef net sales were up from a week earlier, at 19,200 metric tons (mt), and up about 39 percent from the prior four-week average. The three largest buyers were South Korea at 6,200 mt, China at 4,500 mt and Japan at 2,800 mt.
Feeder cattle
Feeder cattle futures traded mostly steady throughout the week but closed mixed. The October contract closed about 40 cents higher to $156.67, and the November contract lost $1.40 to close at $157.65. The CME Feeder Cattle Index lost 15 cents to close at $154.96.
Corn futures found some support through the week and closed higher. The December contract gained 30 cents to close at $5.62, and the March contract also gained 30 cents to close at $5.71.
“Even though feeders are having to push the pen to paper and need to know where their inputs lie, the uptick in the live cattle market has sent strong undertones throughout the cattle complex, and feeders are paying close attention,” Stewart said.
“Strong sales have been reported throughout the country this past week as feedlots are anxious to buy calves. Calves that come to town with a vaccination program and that have been weaned are ringing the bell!
Colorado: Winter Livestock in La Junta sold 1,017 head Tuesday. Compared to a week earlier, steer and heifer calves were lightly tested. Yearling feeder steers sold $1-2 higher. Yearling feeder heifers were scarce. Benchmark steers averaging 776 lbs. sold between $153.25-155.50, averaging $154.83.
Missouri: Joplin Regional Stockyards in Carthage sold 4,000 head on Monday. Compared to the previous week, feeder steers under 600 lbs. were trading $4-7 higher, and heavier weights were trading steady. Feeder heifers were trading steady. Benchmark steers averaging 775 lbs. sold between $156-159, averaging $158.11.
Nebraska: Tri-State Livestock in McCook sold 1,785 head on Monday. Compared to the previous auction, steers were steady to $9 higher, and heifers were steady to $3 higher on good demand. A group of steers averaging 659 lbs. sold between $149.50-150 and averaged $149.90.
New Mexico: Roswell Livestock in Roswell sold 1,600 head on Monday. There is no comparison to a week earlier. A group of steers averaging 690 lbs. sold for $138.50.
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 8,500 head on Monday. Compared to the previous week, feeder steers were steady to $2 higher. Feeder heifers traded $2-4 higher. Benchmark steers averaging 719 lbs. sold between $145-158 and averaged $155.08.
South Dakota: Sioux Falls Regional Livestock in Worthing sold 2,286 head on Monday. Compared to a week earlier, feeder steers 600-650 lbs. sold $10-12 lower, 700-750 lbs. were $3-5 higher and 850-900 lbs. sold $2-5 higher. Heifers were unevenly steady in a very light test, except 850-900 lbs., which were steady to $2 higher. Benchmark steers averaging 770 lbs. sold between $151.75-154, averaging $152.34. — Anna Miller, WLJ managing editor
