Last week was a story of the futures rallying from an oversold position. After setting new contract lows in the futures contracts on Monday, both boards spent the rest of the week clawing their way back up out of their deeper hole.
By the end of the week, all near-term futures contracts—both live and feeder cattle—had gained about $4 compared to the Friday, Sept. 6 settlement. The October live contract settled Thursday at $98.73 and the December live contract settled at $104.95. The feeder cattle contracts settled at $136.85 for September and $134.50 for October.
Cassie Fish of the Beef Report exclaimed Wednesday, “Finally, a big rally day.”
“CME cattle futures have seen big follow-through to the upside today after yesterday’s rally,” she noted midway through the multiday rally.
“Hogs and grains are retreating but cattle are on fire. It’s the first ‘real’ rally since the plant fire and the higher it gets, the higher the hopes of the cattle feeding industry that the post-fire bottom has been established.”
She observed that nothing fundamental had changed, “but psychology certainly has.”
The cash cattle trade came in sluggishly throughout the week, and it did not get the excited memo of the futures. By Thursday afternoon, live trade was $99 and the dressed trade ranged from $156-159 (avg. $158.66). This was 50 cents lower on live and down about $4 dressed compared to the prior week’s averages.
The beef cutouts were also depressed last week. The Choice cutout came in at $219.97 on Thursday (down $7.34 compared to Friday, Sept. 6) and the Select cutout was down $3.34 with $198.60.
“Product values collapsed, down $27/cwt following the peak attained after the Holcomb plant fire,” Andrew Gottschalk of Hedgers Edge noted on Thursday.
“The price collapse is the inevitable result of the sharp advance following the Holcomb plant fire. Basis the choice beef cutout, the next level of support is at $213-217. The good news, the collapse in beef cutout values will keep retailers engaged with aggressive beef features.”
Many feeder cattle auctions came back last week after their Labor Day hiatus. For the most part, volumes were up but prices were down, with several auctions citing the depressed futures as pressuring the cash trade.
Medium and large #1 steers weighing between 700-800 lbs. were averaging solidly in the low $140s, though the price ranges saw the low dip into the $110s.
Iowa: The Clarinda Livestock feeder cattle auction sold over 3,000 head last week, the first sale held in a month. There was no market trend as a result of the long time between sales. However, the report noted that the heavy offering of good quality cattle met with good demand. Two lots of benchmark yearling steers sold between $135-145.
Kansas: The sale volume at the Winter Livestock auction of Dodge City more than doubled last week compared to the week before. This meant there were few comparable sales from which to determine a market trend. Where they existed on 8-weight steers and 7- and 8-weight heifers, feeders traded steady with instances of up $7 and a weak steady respectively. Number 1, 7-weight yearling steers sold between $138.50-146.75.
Missouri: The sales volumes have started creeping back up at the Joplin Regional Stockyards. Last week, the sale sold almost 6,000 head of feeders. Compared to the pre-Labor Day sale held two weeks prior, prices last week were down $3-8 on feeders due in large part to the early-week pressure on the feeder cattle futures. Two lots of #1, 7-weight yearling steers sold, with prices ranging from $134.50-150.
Montana: The Public Auction Yards sold just over 1,000 head of feeders last week in its first sale since August. Compared to that sale, yearling steers under 800 lbs. were up $1-2 on narrow comparisons, while heavier yearling steers were called steady. Heavy yearling heifers were mostly down $3-5. Demand was called moderate to good with aggressive buyers making for an active market. Most of the #1 steer offering was over 800 lbs. For the pair of 7-weight lots, prices ranged from $139-147.
Nebraska: The Huss Livestock Market saw its sale volume go up by about 1,500 head with 3,783 head of feeders sold. There were too few comparable sales for a market trend, but demand was called good to moderate and it improved as the sale went on. Two moderately-sized lots of benchmark yearling steers sold between $143.50-150, but prices on the large 8-weight lots saw very similar averages. The offering was notable for the 800+ lbs. lots being very large, and the prices paid for them were similarly large, relatively speaking. The 920-head lot averaging 969 lbs. averaged $130.13 for instance.
New Mexico: The Clovis Livestock Auction was one of the few sales that had a sale the week before. Volumes were up, but the prices were mostly lower. Steer calves were called $4-5 lower while heifer calves under 600 lbs. were steady to up $1. Yearling steers were up $1 and yearling heifers were down $3. Trade was called moderate to active on good demand. Most of the #1 offering was under 700 lbs. On the three small lots of #1, 7-weight steers, two were unweaned calves while one was a pair of yearlings. The unweaned steers ranged from $117.50-119 while the pair of yearlings averaged $130.
Oklahoma: The sale volume at the Oklahoma National Stockyards doubled compared to the last sale of August. Prices were overwhelmingly lower, with feeder steers mostly down $5-9, with steers over 850 lbs. seeing $12 discounts. Heifers were down $6-8. Calves were down $4-8 for steers and $11-12 for heifers. There were four lots of benchmark steers; two of them large and composed of yearlings and the other two being small and made up of unweaned calves. Despite these differences, the prices didn’t differ too much with the whole group ranging from $124-142.50. The unweaned calves did set the base of the range, but the upper end of the unweaned calf price range was competitive with the yearlings.
South Dakota: Feeder steers were down $5-10 and heifers were down $3-7 last week at the Sioux Falls Regional Cattle Auction compared to the prior sale held at the end of August. Demand was called moderate for the nice offering of attractive feeders. Several long strings of feeders were offered in full and multiple load lots. The pressure from the futures was really being felt. Benchmark yearling steers ranged from $120-139.50.
Wyoming: The Torrington Livestock auction sold almost 1,500 head of feeders last week compared to the none it sold at the most recent sale. Most of the offering was over 600 lbs. The two large lots of #1, 7-weight yearling steers sold between $139-147.75. — Kerry Halladay, WLJ editor