Cash cattle regain some ground
—Wholesale beef price declines beginning
The markets were mixed last week compared to the week before. Cash fed and feeder cattle were both up, futures were mixed, and beef prices finally began to fall.
By last Thursday, over 82,600 head of cattle had been confirmed sold on the cash fed market. Prices had improved somewhat since the prior week, with live cattle selling between $118-20 (compared to $116-119) and $189-191 dressed, which was mostly steady with the prior week.
The sales were jump-started last week with the Fed Cattle Exchange, which traded mostly at the top of the range. Slightly more than half of the offering sold, but it seemed to set the tone for further trading elsewhere on Wednesday and again on Thursday.
Live cattle futures moved in mixed directions last week. The February contract gained a net 75 cents to settle last Thursday at $117.65, but the April contract lost a net 80 cents to settle at $114.83. More deferred contracts were steady to slightly up over the same time.
“The cattle futures market has been a choppy two-sided affair this week with a bias to the downside,” commented Troy Vetterkind of Vetterkind Cattle Brokerage last Thursday.
“In all the futures market feels heavy and tired and is very vulnerable to some further downside if we continue to see lower cattle and beef prices through the end of the month. Burgeoning open interest and a sizeable net long position in the market by the funds makes me think we could see a quick flush to the downside next week or the week after. The spike lows from the first of the month will be key in staving off another round of long liquidation in the futures.”
The beef cutouts finally started downwards last week after surprisingly resilient prices. Over the course of the week, the Choice cutout lost $2.68 to close Thursday’s trade at $188.72. The Select cutout lost $4.11 to close at $185.82. This additionally widened the spread between Choice and Select from the prior week’s incredibly narrow $1.47.
“Product values continue weak,” said Andrew Gottschalk of Hedgers Edge last Thursday. “At this point, reduced production schedules look to be on the horizon in an attempt to provide stability. That would seem a necessary step, as buying interest is limited—despite positive retail margins.”
Last week saw expectations of a 580,000-head production rate and packer margins still in the -$69 area, which was steady with the prior week.
California: The Cattlemen’s Livestock Market of Galt saw steady prices on all classes of feeder cattle last week. The price range for #1, 7-weight steers in particular improved however. Rather than a range with $100 as the low as in the week before, the range last week stood at $110- 123.
Colorado: Last week at the Winter Livestock auction of La Junta saw just over half the volume of cattle sell compared to the prior week’s volume. Steer calves under 650 lbs. were called steady to $1 lower, while heavier steer calves and light heifer calves were up $3-5. Heavier heifer calves were up $1-2. Yearlings were steady to up $1 with preference for steers over heifers. Relatively few #1, 7-weight yearling steers sold narrowly between $128-132.
Iowa: Sale volume was relatively steady last week at the Bloomfield Feeder Cattle Auction. Steer calves were called mostly $2-3 down, with especially heavy calves being discounted $6. Heifer calves were down mostly $5-7 with instances of $2 lower on 6-weights. Good volumes of benchmark steer calves sold between $126.75-133.35.
Kansas: Offerings were off at the Winter Livestock Feeder Cattle Auction of Dodge City, but prices were at least improved. Feeder steers were up $1-6 with it noted that the bulk of trade was in the up $3-5 area. Heifers were called steady to up $4. Numerous packages of benchmark steers were offered ranging from $123.50-134.
Missouri: Offerings were down and prices were up at the Joplin Regional Stockyards last week. Light steer and heifer calves were called steady, but calves over 450 lbs. were called up $4-8 for steers and steady to up $5 for heifers. Number 1, 7-weight steers ranged widely from $119-138, inclusive of calves.
Montana: The Public Auction Yards of Billings saw its offering almost double, but was still quite low at 474 head. The very light receipts the week before made for too few comparable cattle for a market trend. The report also cited poor travel conditions as a likely reason for the low offering and slow market activity. Forty-seven head of #1, 795- lb. yearling steers averaged $125.
Nebraska: The Bassett Livestock Market doubled its offering last week as well. Steers were called unevenly steady and 550-650 lb. heifers were down $2-7. Demand was called good with some buyers noted as looking at some heifer lots as potential replacements rather than feeders. A pair of very large lots of benchmark yearling steers averaged $138.26 for the group that averaged 721 lbs. and $134.93 for the group that averaged 774 lbs.
New Mexico: Things were relatively steady at the Clovis Livestock Auction in terms of sales volume, but prices were in some cases spectacularly higher. While feeder steers were up $2-6, light feeder heifers were up $6-10. Heifers over 600 lbs. were called up $2-3 with instances of up $6 on light 7-weights. Benchmark steers ranged from $123- 129.50 for yearlings and $121 for calves.
Oklahoma: In keeping with a theme last week, sale volumes at the Oklahoma National Stockyards were down last week, but prices were up. Feeders were called steady to up $6 and calves were up $1-4 with instances of up $6 on some heifer calves. Demand for lightweight calves was noted as particularly good. Large variety of #1, 7-weight steer offerings ranged from $120.50-140 with most averages in the mid- to upper- $120s.
South Dakota: The Hub City Livestock Auction saw sales volumes increase only slightly, but prices increased impressively after the fall the week before. Most steers were up $1-5 with the exception of 5-weights, which were up $7-10 with instances of $13 higher. Heifers ranged from up $2-10 with preference going to heifers under 700 lbs. Three large groups of benchmark yearling steers sold with ranging from $128.25-142.75.
Texas: Sale volume was down last week at the Amarillo Livestock Auction with prices running mostly steady where comparable. Yearling feeders were poorly tested and there were only two head of #1, 7-weight steers; the pair of 795-lb. calves averaged $116.
Wyoming: The Riverton Livestock Auction sold slightly more cattle at mixed prices. Light feeder calves were called steady with calves over 500 lbs. called down $3-5. Light heifer calves were up $2, but heavier calves were down $2-5. Two packages of 75 head of calves each averaged $133.20 for the 728-lb. group and $128.48 for the 779-lb. group.
Feeder futures also traded relatively sideways. The March contract gained all of a net 5 cents to settle last Thursday at $123.63 while the April contract gained a net 55 cents over the course of the week to settle at $124.05. As with the live cattle futures, more deferred contracts saw slightly larger gains across the board.
“Strong gains have redeveloped through feeder cattle futures Thursday morning given the lack of support in the grain complex following the USDA crop supply and demand report,” commented Rick Kment, DTN Analyst.
“There is likely to be some additional underlying buyer activity that has been shaken out of the market over the past few days willing to move back into the market.” — Kerry Halladay, WLJ Editor