Cattle markets trended generally downward for much of the week, but were able to modestly rally on Thursday. The futures’ dwindling performance has been driven by the high price of corn, which reached $7 on Thursday. Although live cattle aren’t as directly tied to the corn market as feeders, they have still been impacted by the high prices.
April live cattle futures closed Thursday at $119.47 and the June contract closed at $116.05, slightly higher than the earlier Friday’s close.
The majority of cash trade took place Wednesday with live steers selling between $118-120 and dressed steers selling from $188-191. Some trade also took place Thursday with live steers selling the same as Wednesday and dressed steers selling between $188-195.
The negotiated cattle market for the third week of April was extremely disappointing, with only 67,738 head trading hands. Live steers averaged $121.38 and dressed steers averaged $192.62. A total of 52 percent were committed for delivery in the following two weeks while the remaining 48 percent were scheduled for delayed delivery.
In a Cattle Market News video Monday, ShayLe Stewart, DTN livestock analyst, discussed why packers buying an abundance of cash cattle committed for later delivery can be so problematic. Simply put, it undermines the market. Packers buy cattle with time because they know that either supplies are going to be tight or prices are going to climb higher. Buying cattle for delayed delivery will alleviate the pressures they have in supporting the market in the future.
“By buying so many cattle with time, they’re hindering opportunity in the market for weeks and months to come,” Stewart said. “Next week’s market is going to be pressured because packers don’t need to rely on the market to get the cattle they need.”
Slaughter through Thursday totaled 477,000 head, on trend with a week earlier but about 167,000 head higher than the same time last year while processors were facing the brunt of the pandemic. Total slaughter for the third week of April is estimated at 665,000 head while actual slaughter data for the second week of April totaled 641,881 head.
Boxed beef prices continue to climb, with the Choice cutout at $293.76 and the Select cutout at $279.79, up about $11 and $6 from a week earlier, respectively.
The Sterling Beef Profit Tracker reported packer margins at $673.16 per head as of April 23. This was up about $67 from the week prior, and over $300 higher than a month earlier. The same time last year, packers were making $850.06 per head during the peak of the pandemic.
Feedlots were reported as earning $226.61 per head as of April 23. A week prior they profited $198.01 while only a month earlier they made $51.54 per head. During the same time in 2020, feedlots were in the red -$240.46.
The price of corn is now over $7, which has caused feeders to trend lower and lower as the week went on. Feeders were able to rally some Thursday, but corn continued to climb, with the May contract eventually settling at $7.02.
April feeders settled at $134.47 and May feeders at $135.85. CME reported its latest Feeder Cattle Index Thursday at $135.07, down from the prior Thursday’s $137.53.
“Even though corn futures are still rallying, traders are eyeing cattle futures after their lower trade over the last month and feel as if the market is safe enough to invest in again,” Stewart remarked in her Wednesday midday comments. “At some point, corn’s high price point will be its own demise, and with traders feeling more and more comfortable with both the feeder cattle contracts, that demise may be nearing.”
Colorado: Winter Livestock in La Junta sold 552 head Tuesday. Compared to the last sale, feeder steers sold steady and heifers sold steady to $2 lower, with a decline on 500-600 lbs. A group of steers averaging 589 lbs. sold between $150-152.
Iowa: Russell Livestock in Russell sold 2,061 head on Monday. Compared to two weeks prior, steer calves under 600 lbs. sold mostly $11-15 lower and steers over 600 lbs. were also mostly $11-15 lower. Heifer calves under 600 lbs. were $5-8 lower, and those over 600 lbs. were $5-12 lower. Benchmark steers averaging 785 lbs. sold between $135-143.25 and averaged $139.21.
Kansas: Winter Livestock in Dodge City sold 1,930 head Wednesday. Compared to the prior sale, feeder steers 725-1,000 lbs. sold $1-3 lower and steers 600-725 lbs. sold $3-4 higher. Heifers 650-850 lbs. sold steady to $2 lower and heifers 500-600 lbs. sold $1-2 higher. Benchmark steers averaging 756 lbs. sold for $145.
Missouri: Joplin Regional Stockyards in Carthage sold 4,500 head Monday. Compared to the week prior, feeder steers sold steady while feeder heifers sold steady to $3 lower. Benchmark steers averaging 708 lbs. sold for $146.
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 6,200 head Monday. Compared to the last sale, feeder steers sold steady to $3 lower while feeder heifers sold $4-6 lower. Steer and heifer calves were lightly tested and a few sales sold $6-9 lower. Benchmark steers averaging 775 lbs. sold between $129-139.75.
New Mexico: Roswell Livestock in Roswell sold 1,518 head on Tuesday. Compared to the prior week, steer calves under 600 lbs. sold mostly $5 lower, except 350-400 lbs. sold $1 higher. Feeders over 600 lbs. sold $1 lower on comparable quotes. Heifer calves under 600 lbs. sold $1-3 lower, except for 500-550 lbs. were $5 higher. Benchmark steers averaging 574 lbs. sold between $155-168 and averaged $160.86.
South Dakota: Sioux Falls Regional Cattle Auction in Worthing sold 1,104 head Monday. Compared to the prior sale, feeder steers and heifers sold with sharply lower undertones. Benchmark steers averaging 768 lbs. sold between $133-142. — Anna Miller, WLJ managing editor