Markets were unable to find much momentum following the holiday-shortened week. With most markets and processors closed on Monday, there were reduced volumes seen throughout the whole marketplace.
Live cattle futures traded mostly downward all week but saw some green Thursday. Still, over a week, the October contract lost $2.30 to close at $123.75, and the December contract lost $3.40 to close at $128.80.
Cash trade throughout the week was anticlimactic and slight in volume. Live steers sold mostly between $123-127, averaging closer to $124-125. On the formula side, cattle sold for about $203. Negotiated cash trade for the week ending Sept. 5 was 61,531 head, with live steers averaging $125.77 and dressed steers averaging $201.69.
“Fewer fed cattle will be available in Q4 than since 2017 and stay tight well into the winter and spring—the primary reason for high priced feeders, bullish cattle feeders and premium futures,” wrote Cassie Fish, market analyst, in The Beef on Wednesday.
“The current break in futures has been a big gut check as the question continues on repeat: ‘How much leverage can the cattle feeder claw back aided by tighter fed cattle supplies?’”
The Fed Cattle Exchange listed 4,704 head for its weekly online auction, of which 1,642 head actually sold. Prices ranged from $123-124, and opening bids for other lots started at $122, while most reserves were set at $124.
USDA’s latest price distribution report for Aug. 30 through Sept. 6 shared the following for live basis price distribution:
• Negotiated purchases: $126.01.
• Formula net purchases: $127.33.
• Forward contract net purchases: $126.50.
• Negotiated grid net purchases: $125.64.
For dressed price distribution:
• Negotiated purchases: $201.61.
• Formula net purchases: $201.32.
• Forward contract net purchases: $191.63.
• Negotiated grid net purchases: $201.76.
Slaughter through Thursday totaled 365,000 head, starkly behind last week’s 476,000 head, which could be attributed to higher processing volume in preparation for the holiday. Slaughter for the first week of September is projected at 624,000 head. Actual slaughter for the last week of August totaled 652,561 head.
“Disappointment in fed cattle cash prices and slaughter numbers has impacted stocker and feeder prices at a time of year when runs are heavy and marketings plentiful,” wrote The Cattle Report. “Feeder futures have pulled dollars off the price levels and this week is expected to find the cash markets for replacement cattle weak.”
Boxed beef prices continue to decline. The Choice cutout lost about $5 to close at $332.58, and the Select cutout lost about $8.50 to close at $296.45. “The drop in futures has been much more dramatic thus far than the break in the cutout,” Fish noted.
Feeders were unable to find any momentum over the week. The September contract lost $4.55 to close at $155.75, and the October contract lost $5.80 to close at $159.25. The CME Feeder Cattle Index lost over a dollar through the week to close Thursday at $156.83.
Corn futures have generally traded lower over the past few weeks, with the September contract sitting just under $5 at $4.95 and the December contract at $5.10.
“Following contract highs through the middle of August, traders have quickly backed away from these supportive price levels, although at this point it is uncertain if feeder cattle traders have been able to establish strong support levels at current price levels,” remarked Rick Kment, DTN contributing analyst, in his Thursday midday comments.
“This could add further weakness in the days and weeks to come as the bulk of fall sales of calves is about to begin and could put even further pressure on price levels in the short term.”
With the Labor Day holiday, several auction markets were closed.
Iowa: Russell Livestock in Russell sold 5,111 head on Monday. Compared to the previous auction, steers over 600 lbs. sold $5-10 higher; steers under 600 lbs. were sharply higher compared with limited volume two weeks ago. Heifers sold $2-6 higher, with the largest gain in heifers under 700 lbs. Benchmark steers averaging 735 lbs. sold between $166.25-173.75, averaging $170.81.
Kansas: Winter Livestock in Dodge City sold 1,730 head Wednesday. Compared to the sale a week earlier, feeder steers 600-1,000 lbs. sold $4-9 lower. Steer calves 400-600 lbs. sold $4-6 higher. Feeder heifers 700-950 lbs. sold unevenly steady, and heifers 600-700 lbs. sold $6 higher. Heifer calves 400-500 lbs. sold $5-10 higher. Benchmark steers averaging 765 lbs. sold between $146-152 and averaged $148.11.
Nebraska: Bassett Livestock Auction in Bassett sold 1,860 head Wednesday. Compared to two weeks earlier, 800-950 lb. steers sold $2-4 lower, and 850 lb. heifers sold steady. Benchmark steers averaging 769 lbs. sold for $166.50.
New Mexico: Roswell Livestock Auction in Roswell sold 366 head Tuesday. Compared to the week prior, there were no accurate comparisons on steer and heifer calves or feeders due to limited comparable sales. A group of benchmark steers averaging 694 lbs. sold for $146.
Wyoming: Torrington Livestock in Torrington sold 3,705 head Wednesday. Compared to the last sale, feeder steers over 800 lbs. traded $2-4 lower and under 800 lbs. traded steady. Feeder heifers traded $2-3 lower. Benchmark steers averaging 753 lbs. sold for $160. — Anna Miller, WLJ managing editor