Cash fed cattle trade was sluggish last week, both in pace and price. By the Thursday afternoon slaughter report, not even 7,400 head of negotiated cash fed cattle had been confirmed traded for the week. Prices stood at $115 live and $183 dressed, $1-2 lower than the prior week’s averages.
Throughout the week, analysts predicted steady trade with the prior week’s $114-118.50 (average $117.32) live and $180-185 ($183.66) dressed. Even by Thursday afternoon, the optimism remained.
“Could $119 be in the cards this week as packers gather inventory to finish up a record-breaking profitable year?” asked Cassie Fish of the Beef Report, observing that the overbought futures seemed to be anticipating such a thing.
“Last year this week, cash was $118, though cash topped in early November in 2017, not true this year.”
Near-term live cattle futures were among the only elements of the market to see gains last week. Compared to the Nov. 30 settlement, the December contract gained just over a net $1 with $117.95 and the February contract gained a net $1.30 at $121.80.
Cutouts were shallowly mixed last week, with the Choice cutout gaining a net 6 cents to close Thursday at $212.67, while the Select cutout lost a net 19 cents to close at $198.22.
“Beef cutout values are struggling, with additional near-term selling pressure likely,” commented Andrew Gottschalk of Hedgers Edge. However, he did note that “demand factors do remain positive at this time.” These include expectations for continued wage growth into 2019.
He commented on the wider economy as well.
“The crash in the stock market Tuesday resulted from concern that the yield curve is inverting (short-term rates going premium to long-term interest rates),” he said Wednesday, citing Forbes.
“A negative yield curve has historically been reached two to three years before a U.S. recession is officially recognized. This signal has significant forecasting accuracy in calling recessions. Still, if history is any guide, then perhaps we’re looking at a 2020-2021 U.S. recession.”
Other market watchers credited the Tuesday crash to concerns that the supposed trade truce with China might not turn out. Gottschalk, however, also spoke to the trade-related tumult.
“While potential negative results from the tariff war catch the headlines, the benefits seldom get recognized. The trade deficit nation involved in tariff escalation has the advantage in this situation. Jobs gained resulting from tariffs outpace jobs lost. While some industries lose, other gains overcome losses—providing a net gain to economic growth. If tariffs are so negative, how has China’s economy grown? The answer lies in their imposition and enforcement of tariffs to protect their own industry base. Why would our results differ when we do as they do?”
Feeder cattle
Cash feeder cattle were not so cut and dried as they have been. Recent geographic trends were not so strong last week. Most auctions quotes prices lower, and medium and large #1 feeder steers weighing between 700-800 lbs. ranged wildly.
Colorado: The sale volume more than doubled last week at the Winter Livestock auction in La Junta at 6,749 head. Steer calves under 600 lbs. were up $3-5 with instances of $8 higher. Heifer calves of the same weight group were steady to up $3 with instances of up $8-10. No quotes on yearling feeders. Benchmark steers ranged from $137-150 with calves setting the base.
Kansas: The Winter Livestock Auction saw more cattle sell compared to the prior week, but prices were significantly lower. Steers were down $2-7, with the exception of 5-weight calves which were up $3-7, while heifers were steady to down $6, with most being down $1-2. Discounts on short-weaned, unvaccinated, or unweaned calves were noted. Benchmark steers ranged from $140-149.60 on yearlings and $133.50-138 on calves.
Missouri: Six-thousand head of feeder cattle sold last week at the Joplin Regional Stockyards. There were no price comparisons due to recent sales being special offerings. Demand was called moderate. Two lots of #1, 7-weight yearling steers ranged from $135-150.
Nebraska: The Bassett Livestock Auction Market was down in volume with prices running steady to lower on feeders where comparable sales existed. One 67-head lot of #1, 747-lb. yearling steers averaged $160.75.
New Mexico: Volumes were declining last week at the Clovis Livestock Auction. Prices came down too, with light steer calves trading $4 lower, light heifer calves trading $2-4 lower, and feeders of both sexes over 600 lbs. being mixed $1 up and down. The sharp divide between yearlings and calves when it came to prices on benchmark steers blurred a bit last week. Overall, the class ranged from $120-141.75.
Oklahoma: At almost 14,000 head, the sales volume at the Oklahoma National Stockyards was impressive. Unfortunately, prices on feeder cattle were all lower. Steer calves were down $5-8, yearling steers were down $2-5, heifer calves were down $1-5, and yearling heifers were down $1-4. Quality was called plain to average and the expected strong winter storm slated just after the sale likely hampered buyer eagerness. Several lots of benchmark steers sold, starting with $129.75 for a lot of calves, to $151 on a massive lot of light yearlings.
South Dakota: Compared to the most recent sale several weeks ago, last week’s sale at the Philip Livestock Auction saw steady to higher prices on more cattle. Both steers and heifers were called steady to $5 higher with preference going for heavier animals. Most of the supply were weaned and fully vaccinated. Two large lots of #1, 7-weight steer calves brought averages of $156.88 for the light (716 lbs.) lot and $151.28 for the heavy (768 lbs.) lot.
Wyoming: The Torrington Livestock Commission sold fewer cattle last week and the prices were weaker. Steers were called steady while heifers were $3 lower. One seven-head lot of #1, 7-weight yearlings averaged $159, while a 33-head lot of #1, 7-weight calves averaged $149.50.
The near-term feeder cattle futures lost about a net $1 over the course of the week at $144.20 for January and $141.95 for March, but that belied the large intraweek moves. Triple-digit losses followed triple-digit gains throughout the week, leaving the boards lower on Thursday’s settlement.
DTN’s John Harrington attributed the Thursday losses to lack of buying interest as a result of wider market nerves. — Kerry Halladay, WLJ editor
