After hitting bottom, the only place to go is up. The feeder futures demonstrated this last week, and it’s possible the cash fed cattle did too.
After spending the first half of last week and the better part of the week before in freefall—setting and resetting contract lows for the entire board—the feeder cattle futures suddenly reversed course. The August contract saw limit-up trade, and all but one contract saw gains of over $4.
By close of trade Thursday, the August contract had settled at $135.80, a net gain of over $2 compared to the prior Friday’s settlement. The September contract made similar gains, settling Thursday at $136.10.
The near-term live cattle futures saw even better week-to-week gains without the intra-week price fireworks. The June contract settled Thursday, the second to last day of the contract’s life, at $110.57, a net gain of over $3. The August live cattle contract made similar gains to settle Thursday at $105.35.
Cassie Fish of the Beef Report noted that change is coming to the cattle markets.
“Technically the market looks very positive on daily and weekly charts. So positive in fact it’s hard not to consider that the market made its lows for 2019 this week.”
She also noted that there are good fundamentals in the cattle markets too.
“There have been solid hints for a few weeks. Grading data. Carcass weight data. More empty pens. Greener cattle. The cattle industry has succeeded in aggressively plowing through peak fed cattle supplies.”
The cash fed cattle markets were slow to develop last week, but when they did, they showed the manic nature of the market. By close of trade Thursday, over 12,800 head of fed cattle had been confirmed sold for the week, with prices at $112.50 live and $175-180 (average $176.69) dressed. That was up $1 for live, but down $2 for dressed compared to the averages set the week before.
“The relationship between fed cattle and choice cutout values is near the low end of historical parameters,” Andrew Gottschalk of Hedgers Edge noted on Thursday morning.
“History is mixed as to whether this condition is followed immediately by a cash rebound. Rather, the path for the cutout is lower.”
The cutouts closed at $219.03 Choice (-79 cents compared to June 21’s close) and $196.90 (-$2.65). But intra-week trade was mostly mixed.
Cash feeder cattle were also pretty manic last week, with volumes changing wildly last week compared to the week before. The changes in sale volumes made for difficulties in market comparisons, but prices on medium and large #1 steers weighing between 700-800 lbs. were still in the $130s-140s.
California: The Cattlemen’s Livestock Market of Galt sold over 3,100 head of cattle. Feeders of all weights were called steady. Prices on benchmark steers ranged from $122-149.50.
Kansas: Sale volumes were halved at the Winter Livestock auction of Pratt. Where comparable, feeder steers were mostly steady to down $3, while 7-weight heifers were $2-3 higher. Calves were too few for a market trend. Demand was called good to very good. Only one lot of benchmark yearling steers sold, averaging $131.89.
Missouri: Sales volumes more than tripled at the Joplin Regional Stockyards last week, again making comparisons difficult. Where comparable, steers were steady to $2 higher under 750 lbs. and up $2-7 for heavier steers. Heifer calves were steady under 500 lbs. and mixed up $3 to down $4 on heifers over 500 lbs. with preference going to heavy yearlings. Number 1, 7-weight yearling steers ranged from $130-145, while unweaned steer calves in the category ranged from $124-134.
Nebraska: The Bassett Livestock Auction followed suit with the trend of a wildly different sales volume this week compared to last week. In this case, the auction sold over three times the number of cattle at 5,200 head of feeders. There were no market trends offered, but demand was called good. Benchmark steers sold between $140.25-167, including a 58-head lot of fancy yearlings.
New Mexico: Unlike the other surveyed auctions, the Clovis Livestock Auction had fairly steady volumes while prices were steady to higher. Steer calves sold steady while yearlings were up $1-2. Heifers of all ages were steady to up $3. Benchmark steers from the U.S. ranged from $128-137, while one seven-head lot of Mexican-origin steers averaged $123.
Oklahoma: The OKC West-El Reno sale sold over 8,000 head of feeder cattle last week. This was down from the over 12,700 head sold the week before. Despite the disparity in volumes, steers sold $1-3 higher and heifers sold $2-4 higher. Calves were too lightly tested for a market trend. Benchmark yearling steers sold between $135-144.50, while one 60-head lot of unweaned calves sold at $130.42.
South Dakota: The Mitchell Livestock Auction sold just under 3,000 head of feeders last week, with feeders selling steady to $2 higher, with instances of steers over 1,000 lbs. selling for $5. Demand was called good. Two lots of #1, 7-weight steers sold between $135-154.
Washington: The Toppenish Livestock Auction held its Special Carlot Feeder Cattle Sale and BBQ last week, selling over 1,000 head of feeders. No trends were offered since this was a special sale, but trade was called active on good demand. Prices on #1, 7-weight steers ranged from $120-131. — Kerry Halladay, WLJ editor
