Newsletter- Daily markets

Monday markets

Today’s markets were much stronger with a distinct uptrend insight. CME contracts were all higher by several dollars. There was no fed cash trade today. Packers brought in 51,800 formula cattle priced at $165.25, weighing 879 lbs. Carcass weights gained 4 lbs. over last week, indicating the backlog of slaughter-ready cattle remain.

Beef prices continue their down trend, with Choice boxes trading at $217.21 and Select down to $207.67 on 148 loads. Packers processed 574,000 head last week and steer carcass weights were averaging 916 lbs. Packers will be needing more cattle this week and feeders are looking to add a couple dollars this week.

The Cattle Report noted, “Cattle owners will want to extend the bounce from $101 to $102 Friday and will price cattle higher encouraged by sharply higher futures prices. Cattle trading last week at $101-102 live and $160-161 dressed with little to no differentiation between regions.

China banned pork shipments from Germany over the weekend after identifying an African swine fever hog in Germany.

“The open question is the dovetailing of backed up supplies of fed cattle with short placements from March and April. The date should be sometime between now and October as supplies of fed cattle should be restored to a more meaningful balance. The current push to sell in the fed markets is the result of a backlog of cattle caused by the virus augmented by full feedyards needing pen space.” 

ShayLe Stewart, DTN livestock analyst, said today’s futures trade, “Successfully closed higher Monday afternoon, the live cattle complex looks to the rest of the week, hopeful for strong trade. October live cattle closed $1.35 higher at $106.87, December live cattle closed $1.80 higher at $111.70 and February live cattle closed $1.37 higher at $115.70.

“As the spot October contract reaches a new high for the month, feeders see an opportunity to not only price cattle higher this week but to also take back some leverage. As such, Monday’s cash cattle trade was at a standstill as asking prices to have yet to be established and packers know that feeders are going to be pushing hard for a stronger week. Monday's slaughter is estimated at 120,000 head—not comparable to a week ago because of Labor Day, but that's 1,000 head more than a year ago.”

Stewart continued, “Feeder cattle contracts climbed higher Monday, adding at least $1.50 to each contract if not more. September feeders closed $1.50 higher at $141.50, October feeders closed $2.02 higher at $142.60 and November feeders closed $1.87 higher at $143.20. Monday's close puts the feeder cattle market only $0.45 shy of the 40-day moving average of $141.95.

“At Sioux Falls Regional Cattle Auction in Worthing, SD, compared to two weeks ago, feeder steers sold steady to $2 higher and feeder heifers sold steady to $3 higher. Again, there was special interest in load lots of yearlings and one specific group that stood out was a single consignment of 800 yearlings. Even though the cash market was lower last week, with the strong interest from traders, buyers were a lot less apprehensions about buying as they see strength in the current market. The CME feeder cattle index 9/11/2020: up $0.48, $141.47.”

National Livestock Auction, in Oklahoma City, OK, sold 9,500 head today and reported compared to the last sale two weeks ago: Feeder steers and heifers $4-8 higher. Demand was good but many conditions are right for the buyer. Weaned calves sold mostly steady to firm, however most of the unweaned calves sold at a sharp discount.

Supply did include some reputation brand unweaned calves, and these sold to very good demand. It is only mid-September, but we are already seeing temperatures more typical of October with warm days and cool damp nights. Benchmark steers weighing 779 lbs. averaged $143.82 and another set in thin condition sold for $148.02.

Cassie Fish, market analyst in The Beef, is optimistic about the cattle markets and pointed out, “Show lists are down, which is no surprise and cattle feeders are attempting to regain leverage from the packer. Cattle feeders are banking on the fact that there are fewer total number of market-ready cattle available over the next several weeks than a year ago thanks to the low spring placements due to COVID.

“Despite that fact, not all feedyards are cleaned up on cattle that need to go, and cattle weights are record large—also related to the production slow-down in the spring. These two latter factors will limit just how much loft a cash cattle price rally can get. This won’t change as weights rise for two more months potentially to levels not seen since 2015 when steer carcass weights topped at 930 pounds.

“This week’s slaughter is estimated at 645k to 654k head, depending who you ask. Whatever the number is will not equal last year’s 661k head, nor does it need to as carcass weights ensure production exceeds a year ago anyway.” — Pete Crow, WLJ publisher


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