Reduced slaughter numbers, largely a result of labor shortages thanks to the latest COVID-19 variant, led to lower cash prices this week. On the feeder cattle side, demand has been high.
Live cattle futures posted slightly lower. The February contract lost 25 cents to close at $137 and the April contract lost just under $1 to close at $140.97.
Through Thursday, about 50,000 head sold on the cash market. Live steers sold between $135-138, a couple of dollars short of a week earlier.
While members of the American Farm Bureau Federation (AFBF) were expected to hand down policy on cattle marketing legislation, speakers at the annual meeting threw some cold water on exactly what mandated negotiated cash trade would mean to cattle producers.
“Reduced processing plant throughput in January has raised fear and allowed packers to purchase cattle cheaper than expected the first week of January and cheaper still this week,” wrote Cassie Fish, market analyst, in The Beef. “It’s also allowed packers to purchase fewer cattle than they would if plants were running full strength.”
Cash trade through the first full week of January totaled 47,962 head. Live steers averaged $138.38 and dressed steers averaged $220.05.
The national weekly direct beef type price distribution for the week of Jan. 3 to Jan. 10 was the following on a live basis:
• Negotiated purchases: $138.40.
• Formula net purchases: $140.23.
• Forward contract net purchases: $138.82.
• Negotiated grid net purchases: $139.31.
On a dressed basis:
• Negotiated purchases: $220.04.
• Formula net purchases: $221.12.
• Forward contract net purchases: $210.11.
• Negotiated grid net purchases: $221.24.
Slaughter through Thursday totaled 114,000 head, bringing the week’s total to 455,000 head, 5,000 head short of a week earlier. Estimated slaughter for the week ending Jan. 7 is 620,000 head. Actual slaughter through the first week of January totaled only 524,118 head due to the holiday-shortened week.
A glimpse at marketing beef after the war, in 1945: The stockman sits resting after a hard day on the range or in the feedlot, and wonders about the future. He remembers the time after World War I, when the consumer, driven from his dietary habits, was weaned away from meat.
“So once again, the latest strain of COVID is grabbing headlines and dominating commerce in the beef industry. And until slaughter resumes fully, fear will dominate,” Fish said.
Boxed beef prices have started to ramp up again. The Choice cutout gained $16 from the previous Wednesday to close at $282.86, and the Select cutout gained $13.50 to close at $272.76.
“Packer margins are expanding at a time they typically do not, thanks to the hiccup in production,” Fish said. “This story is understood, frustrating and getting very old for the cattle feeding industry.”
Feeders were down on the board over the week, but ultimately closed slightly higher, thanks to lower corn prices. The January contract gained 80 cents to close at $162.92 and the March contract gained 55 cents to close at $166.72. The CME Feeder Cattle Index was down slightly, 12 cents lower to $162.01.
Corn futures dropped below $6. The March contract lost 15 cents to close at $5.87 and the May contract lost 13 cents to close at $5.89.
Auction markets have been selling in good demand. Superior Livestock Auction’s Bellringer sale in Oklahoma City, OK, took place Jan. 12-14. As of Thursday afternoon, steers weighing between 750-785 lbs. sold from $142-177. A high-selling lot from Detrick Cattle Co. sold 134 feeder steers averaging 750 lbs. for $177. Steers were 100 percent black hided and had a host of value-added programs.
“The market can’t help but to be excited about the demand that continues to support the market in the countryside,” ShayLe Stewart, DTN livestock analyst, wrote in her Wednesday midday comments. “Even though large receipts have saturated sale barns this week, the market has had plenty of buyers and prices have stayed relatively strong.”
Argentina will keep beef export curtailments on some beef cuts in place through the end of 2023 in an attempt to curb domestic inflation.
Colorado: Winter Livestock in La Junta sold 6,615 head on Tuesday. Compared to the previous sale, steers under 450 lbs. sold $8-10 higher, 450-600 lbs. sold $3-5 higher with instances of $8 higher, 600-700 lbs. sold $1-2 higher, over 700 lbs. sold steady to $1 higher. Heifers under 600 lbs. sold $5-8 higher, 600-700 lbs. sold $1-3 higher, over 700 lbs. sold mostly steady. Benchmark steers averaging 770 lbs. sold between $153.75-157.75, averaging $156.08.
Iowa: Russell Livestock in Russell sold 4,241 head on Monday. Compared to the last auction, steer calves under 550 lbs. were $3 higher; 550-700 lbs. sold $5-7 lower; over 700 lbs. traded.$4-7 lower. Heifer calves under 500 lbs. sold $3-4 higher; 500-650 lbs. were $2-3 lower, and 650-750 lbs. traded $4-6 lower. Demand was good for the heavy offerings. Benchmark steers averaging 764 lbs. sold between $156-169.75 and averaged $163.56.
Missouri: Joplin Regional Stockyards in Carthage sold 11,000 head Monday. Compared to a week earlier, feeder steers under 525 lbs. sold $5-7 higher, with heavier weights trading steady to $2 higher. Feeder heifers sold steady. Benchmark steers averaging 770 lbs. sold between $158-164.50 and averaged $161.30.
Nebraska: Tri-State Livestock in McCook sold 2,640 head on Monday. This was the first auction for 2022, so a comparison could not be made. Benchmark steers averaging 733 lbs. sold between $159-169, averaging $167.54.
New Mexico: Roswell Livestock in Roswell sold 1,766 head on Monday. A comparison could not be made as it was the first auction in 2022, but a much higher trend in calves under 500 lbs. was noted on a very uneven market. A group of steers averaging 707 lbs. sold between $144-146.50 and averaged $144.72.
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 17,000 head Monday. Compared to the week prior, feeder steers sold unevenly steady and feeder heifers sold $2-4 higher. Steer and heifer calves sold steady to $3 higher. Benchmark steers averaging 776 lbs. sold between $154-157 and averaged $155.73.
South Dakota: Sioux Falls Regional Livestock in Worthing sold 6,600 head on Monday. Compared to the previous auction, feeder steers 450-500 lbs. sold $2-3 higher; 500-650 lbs. were steady to $5 lower; 650-700 lbs. sold $7-9 lower; 700-800 lbs. were steady to $5 lower; and 800-900 lbs. traded $6-9 lower. Feeder heifers sold $3-6 lower, except 450-500 lbs. traded $8-10 lower; 550-700 lbs. were steady to $4 higher; and 700-750 lbs. sold $7- 9 lower. Benchmark steers averaging 719 lbs. sold between $160-179, averaging $170.82. — Anna Miller, WLJ managing editor