The cattle market entered the new year with a spring in its step. Futures headed higher, and cash prices also trended higher.
Live cattle futures were several dollars higher compared to the week earlier. The December contract gained about $3 to close Tuesday at $138.47, and the February contract gained about $2.50 to close at $139.40.
There was some cash trade in the early part of the week, with about 66,461 head sold through Tuesday. Live steers sold between $138-141, and dressed steers sold between $218-220. Formula cattle averaged about $220.
“Traders know that it’s going to be an odd week for the cash market given that it’s a holiday-shortened week, but traders still want the green light from the cash market before boldly supporting the technical side of the market,” ShayLe Stewart, DTN livestock analyst, remarked in her Tuesday midday comments.
Cash trade through the week of Christmas totaled only 36,779 head. Live steers averaged $135.60, and dressed steers averaged $217.32.
The national weekly direct beef type price distribution for the week of Dec. 20-27 was the following on a live basis:
• Negotiated purchases: $135.70.
• Formula net purchases: $141.38.
• Forward contract net purchases: $136.73.
• Negotiated grid net purchases: $142.69.
On a dressed basis:
• Negotiated purchases: $217.30.
• Formula net purchases: $224.73.
• Forward contract net purchases: $207.36.
• Negotiated grid net purchases: $222.92.
Slaughter through Tuesday totaled 238,000 head, a couple thousand head above the same time a week earlier. Christmas Eve slaughter was about 10,000 head, and there was no Saturday slaughter due to the holiday. Slaughter for the holiday week is estimated at 488,000 head. Actual slaughter through Dec. 11 totaled 667,700 head.
Boxed beef prices were slightly higher over the week, with the Choice cutout up $3.27 to $264.66 and the Select cutout up about $6 to $256.09.
“This week will mark the last week of the year, and year-end cattle inventory numbers will be posted following this week’s slaughter announcements,” wrote the Cattle Report. “We are certain the national herd is destined to be in decline, probably by as many as 1 million beef cows. As the year ends, drought areas in the west are finding some relief in the form of rain, but new areas of drought in the panhandle of Texas and Kansas are developing.”
Feeder cattle
Feeder cattle futures also closed higher on Tuesday. The January contract gained about $3 to close at $163.55, and the March contract gained about $4 to close at $165.22.
The CME Feeder Cattle Index lost 78 cents to close at $159.56.
Corn prices were able to gain some value over the week, closing Tuesday with the March contract up 6 cents to $6.04 and the May contract up 7 cents to $6.06.
“From now until after the new year, sale barns mostly take the two weeks off to rest up and take a much-needed break. There will be some replacement female sales here and there, but by and large the feeder cattle market won’t see a sizeable test of calves/feeders sell until after the new year,” Stewart said in her Monday comments.
“This negatively affects the CME Feeder Cattle Index and leaves the futures complex to fend for itself. And, while the market was able to trade mostly higher last week, doing that two weeks in a row is a tough row to hoe.” — Anna Miller, WLJ managing editor
(Editor’s note: Due to the New Year’s holiday, WLJ went to press Wednesday morning. This report only includes information released as of Tuesday afternoon.)
