The cattle and beef markets were just barely keeping their heads above water last week. Overall, most of the market saw losses as cutouts succumbed to pressure, cash cattle to futures weakness, and futures to a cast of potential problems.
“Is it almost over, this deluge of selling?” asked Cassie Fish of the Beef Report on Thursday. “Why is it happening at this time of year? The coronavirus news would seem to have been the catalyst. The reality of course is that managed funds were trapped long $5-10 higher and this has simply been ‘get me out’ selling, plain and simple.”
The near-term cattle futures came out of the week mixed sideways. Both the front month contracts for live and feeder cattle contracts were down, while the on-deck months were up. The February live contract lost a net 25 cents with a Thursday settlement of $121.13 and the March feeders lost 85 cents with $135.90. The gains in April live and April feeders were miniscule at 7 cents ($119.75) and 5 cents ($137.58) respectively.
Values weren’t the only things that struggled to tread water; futures volumes took a hit too.
“It’s been 10 days and CME live cattle futures open interest has dropped 61k contracts, over 15 percent,” Fish noted.
“It is a painful reminder for traders and cattle feeders that managed funds have more power in CME livestock futures than anything in a condensed timeframe. Certainly, the fundamentals.”
The losses in the futures had some impacts on the feeder cattle auctions last week. Several auctions either blamed depressed prices on the feeder futures losses, or noted good prices in spite of the futures. Medium and large #1 class feeder steers weighing 700-800 lbs. were still averaging in the $140s.
Colorado: The Sterling Livestock Commission sold almost 1,700 head of feeder cattle last week. There were no trends since there hasn’t been a sale for some time, but trade was called active and demand was moderate. Two lots of #1, 7-weight yearling steers sold between $142-148.25.
Iowa: Feeder offerings were down last week at the Russell Livestock Auction. Prices, on the other hand, were up. Light steers sold up $2-10, and midweight steers sold $1-5 higher. Heifers were called steady to $6 higher. The demand was called good with active trade. Two large lots of benchmark yearling steer sold between $134-155.75.
Kansas: The Farmers and Ranchers Livestock Commission held its special feeder cattle sale last week. There was no market trend offered given how long ago the prior special feeder sale was held. All feeders were weaned and had at least one round of shots. Demand was called very good in the face of the recent feeder futures sell off. The benchmark steers that sold ranged from $134 for a small, fleshy lot of yearlings, to $160.35 for a half load of fancy yearlings.
Missouri: Over 7,500 head of feeders sold last week at the Joplin Regional Stockyards with comparable sales of steer calves being up $2-5. All other classes of feeders—yearling steers and heifers, and heifer calves—came in at steady to $5 higher. Demand was called moderate to good. Two large lots of #1, 7-weight yearling steers sold between $132.50-153; averages were solidly in the $140s.
Nebraska: The Bassett Livestock Auction sold 4,485 head of feeders, down by over 1,000 head compared to the prior week’s offering. However, prices were mostly higher. Steers traded steady to up $4 and light heifers sold steady to up $2. Heifers over 650 lbs., however were down $6-9. Demand was called good with active internet bidding. Number 1, 7-weight yearling steers were the upper end of the weight offering for the class. They sold at $152.50-160, including a natural lot.
New Mexico: The Roswell Livestock Auction sold 1,6467 head of feeder cattle last week, up over 500 head from the prior week’s offering. Prices were mostly up with light steers trading steady to $5 higher. Steers over 700 lbs. were $4 lower, however. Heifers of all ages saw gains, with the lights selling for $2-5 more and midweights trading steady to $3 higher. Only a pair of #1, 7-weight yearling steers sold; they were 740 lbs. and averaged $131.50.
Oklahoma: The National Stockyards sold half the number of feeders last week as it did the week before. Still, prices on feeder steers were up $1-6 and steady to up $3 on calves. Heifers were called steady to $3 lower on all ages. Demand was called moderate to good, with particular demand for good, light stocker cattle suitable for grass. Prices on benchmark steers ranged from $131-152, inclusive of unweaned calves and “full” yearlings.
South Dakota: The Hub City Livestock Auction also sold fewer cattle last week compared to the week before. Midweight steers were mixed up and down $4 with preference for the lighter end, and steers over 700 lbs. were called steady. Heifers were called steady but not well compared. There was good demand for the large strings, especially of backgrounded cattle and attractive calves. Benchmark yearling steers sold between $136 for a small, fleshy lot, and $157 for a large lot of 718-lb. yearlings.
Wyoming: The Torrington Livestock Feeder Cattle Auction sold over 1,400 head of feeders last week, well below the prior week’s 4,014 head. This meant there were no trends offered. Good weather in the area helped stoke demand. One 158-head lot of 768-lb. yearling steers sold, averaging $141.28.
Cutouts were down, with the Choice cutout losing a net $2.07 over the week with a Thursday close of $210.93, and the Select cutout lost $4.70 with $205.96.
Still, it’s important to keep cutout prices in the context of production.
“Fundamentally, January saw record beef production thanks to an aggressive slaughter schedule, ample fed cattle supplies and profitable packing company margins,” reported Fish on Monday. “Last week’s USDA Comprehensive Boxed Beef report showed values very near last year and the five-year average, remarkable for the level of production.” — Kerry Halladay, WLJ editor