Cassie Fish of the Beef Report likely said it best when she called last week slow. But that’s par for the seasonal course. She noted that September is “known for slow markets.”
Some price trend-setting negotiated cash fed trade had developed by close of trade on Thursday, Sept. 6, but not much. Just over 10,800 head of cattle had been confirmed sold for the week by Thursday afternoon, with most of that happening on Thursday. Prices ranged from $106-109 (average $107.92) live and $170 dressed. This was a firm steady compared to the prior week’s averages of $107.12 live and $169.69 dressed.
The interplay between the availability and price for fed cattle was possibly one of the most active areas of last week’s market.
“This industry is facing record-high totals of cattle on feed, with front-end supplies second only to the record achieved in 2015,” cautioned Andrew Gottschalk of Hedgers Edge.
“Front-end fed cattle are estimated to be up 33 percent from September last year. The weakness already showing in the product prices is concerning, given a reduced production schedule last week and this week’s holiday-shortened schedule. If the product cannot rebound following short production weeks, it is a stretch to believe it will recover when full production resumes.”
By close of trade Thursday, the Choice cutout fell about $1 over the week to $208.75, and the Select fell about $3.50 over the week with a Thursday close of $197.83.
On the other hand, Fish pointed to a recent USDA report that outlined the largest Weekly Comprehensive Boxed Beef trade volume since 2002 when that record began as evidence of demand worthy of allaying fears.
“Bears argue the supply of market-ready fed cattle is still plentiful, and that ought to be enough to keep a lid on cash prices or force them still lower. However, increasing evidence that in 30 days, showlists will be declining noticeably can’t be avoided. At this point, odds are just as good that cash bottomed last week than another buck or two can be carved away by month’s end,” Fish argued.
“Looking ahead, packers don’t own as many forward contracted cattle for September or October as a year ago. This year’s contracts stand at 184k for September and 166k for October. Last year, packers owned 250k and 233k head for the same time frame. This means packers will continue to need to purchase more of their needs in the negotiated market as has been the case all 2018.”
Near-term live cattle contracts traded mostly flat but with a slight upward trend over the course of last week. The October contract gained a net 13 cents over the course of the week, settling Thursday at $108.90. The December contract gained a net 75 cents to settle at $113.72.
Cash feeder cattle sales were mixed last week compared to the week before. Most auctions saw lower sales offerings for one reason or another—either challenging weather or light supplies—and prices were mixed. For medium and large #1 steers weighing between 700-800 lbs. prices stayed strong with most prices in the $150s-160s.
Kansas: Heavy rains led to light offerings last week at the Winter Livestock Auction in Dodge City. Just barely 1,000 head were offered, making comparable sales almost impossible. Trends were called steady to firm with higher overtones in steers. Two lots of #1, 7-weight yearling steers sold; the light (709 lbs.) one averaging $161.07
Montana: The Public Auction Yards sold 644 head last week, down from the 1,028 head sold the week before. As a result of the light test, no market trend quotes were offered. Demand was called moderate for yearling cattle and for loads of spring-born calves. There were no benchmark steers reported sold, but #1, 7-weight yearling heifers sold for $141.
Nebraska: Receipts were down by a third last week at the Bassett Livestock Auction Market. Compared to the most recent sale, the best comparisons were on 9-weight steers and 8-weight heifers, which were steady to up $4 and down $3-6 respectively. The offering of #1 cattle was unusually heavy, with the two lots of 7-weight yearling steers being among the lightest. That pair of lots ranged from $161.50-167.25.
New Mexico: The Clovis Livestock Auction sold more cattle last week at mixed prices. Steers under 500 lbs. were down $1, while those over were steady to up $1. Heifers under 600 lbs. were down $1-3, while heavier heifers were up $3. This time, #1 steers trended on the light side, with 7-weights representing the heaviest #1 offering. A variety of lots—including standard calves, value-added calves, and standard yearlings—ranged from $131-153.
Oklahoma: Volumes were down a third at the OKS West-El Reno sale last week. Despite this, feeder steers were called firm to up $3, while heifers were steady. There were too few comparable sales of calves for a market trend, but demand was noted to be good for weaned calves. Benchmark steers, inclusive of calves, sold for $147-157.
South Dakota: Feeders were steady to up $2 at the Mitchell Livestock Auction. Demand was strong for yearling cattle, and several long strings of full loads sold readily. Only eight head of #1 yearling steers weighing 729 lbs. sold in the benchmark group. The group averaged $163.
Wyoming: Compared to the special feeder cattle sale held a couple weeks ago, the Riverton Livestock Auction saw too few comparable sales for a market trend on feeders. Demand was called good, especially on yearlings. Benchmark yearling steers ranged from $147.75-159.
Near-term feeder futures were also fairly flat, but they performed better than live cattle futures. By the end of the week, both the September and October contracts gained about $2.50, with settlements of $151.77 and $151.52 respectively. — Kerry Halladay, WLJ editor