Markets at the beginning of the week were mostly influenced by the news that a fire at the JBS plant in Grand Island, NE, was going to halt production. Fortunately, slaughter and fabrication operations ceased for just one day. However, before production resumed, futures dropped for both live and feeder cattle.
The October live cattle futures contract lost about 15 cents over a week to close at $123.60, and the December contract lost a little over 20 cents to close at $128.57.
“Steady to weak cash cattle trade as well as pressure in morning boxed beef prices limited any additional interest in buyers who have become comfortable sitting on the sidelines,” remarked Rick Kment, DTN contributing analyst, in his Thursday closing comments.
Cash trade through the week was disappointing, with the only real volume happening on Wednesday afternoon. Through Thursday morning, the volume totaled only about 50,000 head. Prices were generally steady with a week earlier, if not slightly stronger in some incidences. Live steers sold between $123-126, and dressed steers sold between $196-200. The Fed Cattle Exchange did not host their weekly online fed cattle sale on Wednesday due to technical difficulties.
Negotiated cash trade through Sept. 12 totaled 71,507 head, which seems to be the new average, compared to numbers seen months ago that were closer to 100,000 head. Live steers averaged $124.93, and dressed steers averaged $200.62. A total of 237,282 formula cattle sold through Sept. 12.
The national weekly direct beef type price distribution for the week of Sept. 6 to Sept. 13 was the following on a live basis:
• Negotiated purchases: $124.88.
• Formula net purchases: $127.60.
• Forward contract net purchases: $128.33.
• Negotiated grid net purchases: $127.78.
On a dressed basis:
• Negotiated purchases: $200.26.
• Formula net purchases: $203.15.
• Forward contract net purchases: $197.92.
• Negotiated grid net purchases: $203.29.
Slaughter through Thursday totaled 475,000 head, on account of the JBS fire limiting slaughter numbers. The plant has the capacity to process about 6,000 head per day. A year earlier, slaughter totaled 480,000 head. Slaughter through Sept. 9 is projected to be only 577,000 head, while USDA confirmed slaughter for the first week of September to total 620,995 head.
Boxed beef prices are steadily declining now that holiday demand is over until Christmas time. The Choice cutout lost about $14.50 over a week to close at $318, and the Select cutout lost about $16 to close at $280.27.
“Unbelievably, the rib primal made another new all-time high last week, and the Choice/Select rib spread also made a new high, which is the primary contributor to the overall Choice/Select spread, pushing out to the record made during the pandemic shutdown in 2020,” said Cassie Fish, market analyst in The Beef.
“It may have been over a year since that historic disruption, but extreme market moves are still occurring with regularity.”
Feeder cattle
The September feeder cattle contract closed 12 cents higher over a week to $155.87, and the October contract lost $2.15 to close at $157.10. The CME Feeder Cattle Index lost about $2.80 to close at $154.02.
“Feedyard placements are returning to a more normalized level in August,” wrote The Cattle Report. “There remains a smaller replacement pool of cattle to draw on for future placements and feedlots will compete for dwindling supplies leaving some pens empty this fall.”
USDA released its September World Agricultural Supply and Demand Estimates (WASDE) report a week earlier and raised the national estimated corn yield 1.7 bushels to 176 bushels, or 4 bushels over last year’s crop. The 2021 crop is projected to produce over 15 billion bushels at a 6 percent increase compared to last year’s final numbers.
“Production costs in the feedyard have run cost of gain numbers on cattle closing out this summer and fall to well over $1,” the Cattle Report said. “Expectations with lower corn prices will reduce forecast gains under $1. Feedyard profitability has been disappointing for two years and changing that condition may not come easy, but will be necessary to restore stability to American beef production.”
Kansas: Winter Livestock in Dodge City sold 1,846 head on Wednesday. Compared to the previous sale, feeder steers 450-900 lbs. sold unevenly steady. Feeder heifers 500-950 lbs. sold $4-7 lower. Benchmark steers averaging 775 lbs. sold between $155.75-159.75, averaging $157.79.
Missouri: Joplin Regional Stockyards in Carthage sold 6,500 head Monday. Compared to the last sale two weeks earlier, feeder steers under 750 lbs. sold $3-4 lower, and steers over 750 lbs. sold steady. Feeder heifers sold steady. Benchmark steers averaging 777 lbs. sold between $151.50-157, averaging $153.97.
New Mexico: Roswell Livestock Auction in Roswell sold 740 head Monday. There were no accurate comparisons on steer and heifer calves or feeders, but a lower undertone was noted. Benchmark steers averaging 767 lbs. sold between $135-137, averaging $135.69.
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 8,750 head Monday. Compared to two weeks earlier, feeder steers and heifers sold $5-8 lower, and steer calves sold $8-10 lower. Heifer calves were not well tested. Benchmark steers averaging 770 lbs. sold between $146-154, averaging $150.96.
South Dakota: Sioux Falls Regional Cattle Auction in Worthing sold 2,020 head Monday. Compared to two weeks earlier, feeder steers and heifers sold unevenly steady. Benchmark steers averaging 770 lbs. sold between $150-160, averaging $158.03. — Anna Miller, WLJ managing editor
