Futures closed Thursday on a green note, while cash trade continued to hold out until later in the week. Packers have been slow to purchase cattle, unwilling to sacrifice their margins further than minimal slaughter needs.
Live cattle futures found movement higher over the week. The April contract gained $2.17 to close at $188.72, and the June contract gained $3.37 to close at $184.60.
Cash trade through Thursday totaled less than 25,000 head. Live steers sold from $182-186, and dressed steers sold from $290-292.
“Packers are doing all they can but are still being forced to pay up to cover minimal slaughter levels,” Cassie Fish, market analyst, wrote in The Beef on Thursday.
“Packers are caught in the proverbial squeeze, no surprise given where the market is in its supply cycle,” she continued. “Packer margins will likely end this quarter red and mark the 6th consecutive month of losses.”
Cash trade through the week ending March 3 was 71,697 head. Live steers averaged $183.25, and dressed steers averaged $290.34.
The national weekly direct beef type price distribution for the week of Feb. 26 to March 4 was the following on a live basis:
• Negotiated purchases: $183.16.
• Formula net purchases: $184.91.
• Forward contract net purchases: $190.67.
• Negotiated grid net purchases: $184.67.
On a dressed basis:
• Negotiated purchases: $290.59.
• Formula net purchases: $291.65.
• Forward contract net purchases: $297.43.
• Negotiated grid net purchases: $289.56.
Slaughter through Thursday was estimated at 484,000 head, about 11,000 head short of a week earlier. Projected total slaughter for the week prior is 599,000 head. Actual slaughter for the week ending Feb. 24 was 590,486 head. The average steer dressed weight was 914 lbs., the same as the week prior.
“Balancing feedlot supplies, weekly slaughter, and finally beef demand is a work in progress. It remains unknown if a slaughter rate of 590,000 a week is going to back up cattle in the nation’s feedlots,” the Cattle Report wrote on Thursday.
“Processors’ margins continued to struggle with box prices gaining ground, but the improvement failed to match the necessary margin for a profit,” the Cattle Report continued.
Boxed beef prices were a couple dollars higher over the week. The Choice cutout gained $2.41 to close at $306.61, and the Select cutout gained just over $2 to close at $296.26. The Choice-Select spread was $10.35.
“The first estimates for the Feb. 22, USDA Cattle on Feed (COF) report are being circulated and as expected, placement estimates are above a year ago while marketing numbers are boosted above a year ago only the extra slaughter day,” Fish said. “Total COF numbers will be slightly above a year ago hovering around the fourth highest Feb. 1 COF in the last 10 years.”
Feeder cattle
Feeder futures gained several dollars. The March contract gained just over $2 to close at $251.02, and the April contract gained about $2.60 to close at $256.30.
The CME Feeder Cattle Index gained $1.81 to close at $248.07.
Corn futures have continued their momentum and were back with another week of gains. The March contract gained 11 cents to close at $4.26, and the May contract gained 9 cents to close at $4.38.
“All in all, the corn market’s upturn shouldn’t gravely affect the feeder cattle complex as demand still remains strong in the countryside,” ShayLe Stewart, DTN livestock analyst, wrote on Thursday.
She added, “Just Wednesday afternoon, four-weight calves were selling for $1,800 in South Dakota—this market is hot even though the futures complex is posting a weaker day.”
Colorado: Winter Livestock in La Junta sold 2,155 head on Tuesday. Compared to the last auction, feeder steers under 550 lbs. sold unevenly steady, while steers over 550 lbs. sold mostly $2-13 higher. Feeder heifers sold $3-8 higher, with instances of sharply higher across all weight classes. Benchmark steers averaging 724 lbs. sold between $252.50-260.50, averaging $255.05.
Iowa: Russell Livestock in Russell sold 3,782 head on Monday. Compared to the last auction, steers under 650 lbs. sold sharply higher, while steers 650 lbs. and heavier sold $5-16 higher. Heifers sold steady to $11 higher. Benchmark steers averaging 730 lbs. sold between $260-285, averaging $276.40.
Missouri: Joplin Regional Stockyards in Carthage sold 10,000 head on Monday. Compared to a week earlier, feeder steers under 725 lbs. sold $5-15 higher and heavier weights sold steady to $4 higher. Feeder heifers sold $2-8 higher. Benchmark steers averaging 768 lbs. sold from $238-258, averaging $247.23.
Montana: Miles City Livestock Commission in Miles City sold 943 head on Tuesday. There were not enough sales at the previous auction for an accurate comparison. A group of steers averaging 726 lbs. sold between $267-268, averaging $267.13.
Nebraska: Tri-State Livestock in McCook sold 1,445 head on Monday. There were not enough sales for an accurate comparison. Benchmark steers averaging 734 lbs. sold for $262.50.
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 8,500 head on Monday. Compared to a week prior, feeder steers and heifers sold $3-6 higher. Steer and heifer calves traded $8-10 higher. Demand was moderate to good. Benchmark steers averaging 775 lbs. sold from $245-268, averaging $250.73.
South Dakota: Sioux Falls Regional in Worthing sold 4,878 head on Monday. Compared to the last auction, steers 600-700 lbs. sold $5-9 higher, and 750-950 lbs. traded mostly $1-5 lower. Heifers 450-650 lbs. were mostly $5-10 higher, with instances of sharply higher, especially in the 450-550 lbs. range. Heifers 700-800 lbs. sold mostly $2 higher, and 850-900 lbs. traded mostly steady. Benchmark steers averaging 774 lbs. sold between $235-259.50, averaging $248.19.
Texas: Lonestar Stockyards in Wildorado sold 921 head on Tuesday. Compared to the previous auction, feeder steers traded mostly $2-4 lower on like kinds. Feeder heifers traded firm to $4 higher. There were not enough comparable sales on steer or heifer calves but a higher undertone was noted. Benchmark steers 783 lbs. sold between $241-241.50, averaging $241.14. — Anna Miller, WLJ managing editor
