The game of chicken played out between cattle feeders and packers last week held off until the very end.
There was little negotiated cash trade throughout the week at only 13,900 head confirmed by close of day Thursday, meaning the bulk of the trade was pushed off to Friday. As analysts had expected, cash prices struggled to stay steady with the prior week. Prices on cash cattle on Wednesday—when the bulk of that 13,900 head sold—came in at $107 live and $170 dressed.
According to the August live cattle contract, which expired on Friday, these prices were a bit low. The August contract closed Thursday at $109.80, up a net $3.55 over the course of the week. The October contract gained a net $2.37 to settle at $109.07.
The big question last week was what beef would do over the Labor Day weekend.
“Whether new cash lows are scored post-Labor Day will depend upon the level of retail beef sales,” warned Andrew Gottschalk of Hedgers Edge on Wednesday last week. He reviewed many retail promotions on beef in the Denver metro area of Colorado; Safeway at $4.77 for Colorado Choice T-Bone; King Soopers, a division of Kroger, led with a $4.99 Choice bone-in strip ad.
“Retailers are responding as expected with near-record-high retail beef margins.”
Cutouts faltered last week, with Choice losing about $2.50 and Select losing about $1.50 over the course of the week with $211.73 and $202.21 respectively.
“The undertone to the cutout value is very weak, with lower prices expected following post-Labor Day fill-in business completion,” commented Gottschalk. “The downside objective for Choice product is $202-205.”
Feeder cattle
Several feeder cattle auctions weren’t held last week due to the impending Labor Day holiday. What trends could be divined from those that did occur were mixed. In general, medium and large #1 steers weighing between 700-800 lbs. sold in the mid-$150s.
Kansas: The Winter Livestock Auction sold more cattle last week than the week before. Prices on feeders were steady to up $1 on the few comparable offerings. Calves were called steady. A pair of benchmark steer lots sold between $154-158.10.
Missouri: Over 6,000 head of feeder cattle sold at the Joplin Regional Stockyards last week. Calves were called steady to down $2, with some spots of down $3-5 on heifer calves. The report noted that a lot of the calf offering were unweaned as short forage is making producers push their marketing forward. Yearlings were few but firm where available. Prices on #1, 7-weight steers ranged from $152.50-157.
Nebraska: The Sheridan Livestock Auction company sold 1,816 head of mostly feeder cattle last week. Compared to the sale two weeks prior, yearling steers sold down $5 and heifers were down $2-4. A half load of #1 yearling steers averaging 703 lbs. averaged $155.86.
New Mexico: Sale volumes were steady at the Clovis Livestock Auction. Light feeders sold $3-5 higher while 5-weights were down $1-4, and heavier feeders were steady except for some heifers which got up to up $3. Two lots of benchmark steers sold, with the yearling lot selling at $152 and the calf lot selling at $137.50.
Oklahoma: The OKC West-El Reno sale sold just over 6,000 head of feeders last week. Feeders were called steady to $2 lower. Prices on benchmark steers ranged from $147-157.
Much like the live cattle futures, the feeder cattle futures spent most of the week bobbing up and down. By the close of trade Thursday, however, the near-term contracts were up compared to their Aug. 24 settlements with $149.47 on August and $150.17 for September. — Kerry Halladay, WLJ editor
