Even by the end of the week last week, the market’s direction was uncertain.
The cash fed cattle trade was slow last week. By close of the afternoon report on Thursday, just over 20,600 head of negotiated cash fed cattle had been confirmed sold for the week. Prices on Thursday, when the bulk of the confirmed trade happened, stood at $110-116.50 (average $112.46) live and $183-185.50 ($184.88) dressed. This was down about $2.50 live and up about 50 cents dressed compared to the prior week’s averages.
Expectations for last week’s cash cattle prices zig-zagged up and down with the actions of the futures market. By Thursday’s settlement, the near-term futures were mixed, with the live contracts up compared to Friday, June 7’s settlements, and the feeder contracts down.
The near-term live contracts settled Thursday at $109.05 (+$2.12) for June and $104.73 (+$1.43). The near-term feeder contracts on the other hand settled about a $1 lower over the course of the week, with August at $136.23 and September at $136.50.
“CME cattle futures have demonstrated a great deal of volatility in the last five trading days,” commented Cassie Fish of the Beef Report on Thursday, June 13.
“This type of volatility is hard on the emotions of the humans who make their livelihood in this business. There’s a sense that the algos have taken over but only they would know for sure. Therefore, knowable explanations for the markets’ erratic behavior are scarce if not non-existent.”
The behavior of the feeder futures was mimicked in the behavior of the feeder auctions. While sales were mixed on sales volumes, the prices were generally down, with averages on most medium and large #1 steers weighing 700-800 lbs. in the $130s.
Kansas: The Winter Livestock auction of Dodge City sold half the number of feeder cattle last week compared to the week before. The low volume made for limited comparable weights. Best test was on feeder steers weighing 850-90 lbs., which were steady to up $1. Seven-weight heifers were up $6-7. Calves were an uneven steady on limited comparable weights. A small number of benchmark steers sold between $130.50-138.25.
Missouri: Sales volumes decreased at the Joplin Regional Stockyards last week and prices on feeder cattle were mixed. Steers under 500 lbs. were steady to up $4, while heavier steers were an uneven steady. Heifers were steady to $3 lower for anything under 600 lbs. and the opposite for anything heavier. Prices on #1, 7-weight yearling steers ranged from $127-137.50.
New Mexico: The Clovis Livestock Auction sold more feeder cattle last week compared to the week before, and most feeder calves were up $2-4, with instances of $8 higher on 5-weight calves. Seven-weight feeders were down $2. Two lots of #1, 7-weight steers sold between $129-135.
Oklahoma: Volumes also increased at the OKC West-El Reno sale, which sold over 9,750 head of feeders. Feeders over 800 lbs. were called $5-6 higher, while lighter weights were not well tested. Demand was called good on yearlings, and moderate on calves. Standard #1, 7-weight yearling steers ranged from $130-145, while a trio of unweaned, 715-lb. calves averaged $123.
South Dakota: The volume of feeders sold last week was almost double what it was the week before at the Hub City Livestock Auction. The best test was on 750-1,000-lb. steers at steady to down $2. There were too few heifers for a market trend. Demand was called good on the large strings and loads of mostly weaned fall calves. Two lots of benchmark steers of very similar average weights sold. The 171-head lot averaged $140.33, while the 27-head lot of “fleshy” yearlings averaged $130.50.
Cutouts were down on the week, losing about $1 in Choice, which closed at $222.10, and down slightly over $2 in Select with $204.71.
“Choice beef cutout values continue to experience a weak undertone, with weekly slaughter expectations revised upwardly to 665,000 head,” commented Andrew Gottschalk of Hedgers Edge. He additionally noted that the initial summer downside price target for the Choice cutout is $212-215 with long-term support at $202.
“Given that we are in the best beef demand period of the year and coupled with a projected decline in front-end fed cattle supplies, it is essential for this market to show some price improvement this week,” he continued.
“The ‘dog-days’ of summer will soon dominate the demand side of the market. Even in the best supply/demand conditions, it is difficult for prices to advance during this period. The best opportunity to initiate an advance is from now into the July 4th period, as front-end fed cattle supplies project to decline below prior-year levels as the third quarter approaches.” — Kerry Halladay, WLJ editor