Markets up ahead of holiday
—Move violates seasonal norms
In an odd turn on historic norms, the markets were up just before Easter. On every point, prices improved last week.
By close of trade last Thursday, over 70,000 head of cattle had been confirmed sold on the negotiated markets. At $123.50-131 live and $200-208 dressed, prices on cash fed cattle were up $1-4 live and $2-10 dressed.
Near-term live cattle contracts saw some impressive gains last week at levels not seen for a while. Most of the gains came on Tuesday and are likely “to blame” for the gains made in the cash trade.
Over the course of last week, the April contract gained a net $5.33 to settle last Thursday at $125.38. The June contract gained a net $2.90 to settle last Thursday at $114.70.
“The rally in the cattle futures market has narrowed a near-historically wide basis and the sellers are resistant to the shift,” noted Andrew Gottschalk of Hedgers Edge last Thursday morning, accurately predicting that the closure of the futures markets for Good Friday might spur cash activity at higher levels by Thursday’s close.
The decline of the cutout also reversed slightly last week. Compared to the two prior weeks of steady declines, the Choice cutout gained $3.45 over the course of last week to close last Thursday at $210.67. The Select cutout also gained, but not to that extent. As of last Thursday it had gained $1.27 to close at $198.76.
What the near future will hold on cutout prices however is anyone’s guess.
“Typically, the post-Easter week has proved to be a disappointment for sales,” Gottschalk noted early in the week. “The trade gets more excited than consumers regarding beef sales.
Retailers are raising their average price with additional price advances to follow.”
Easter this year has fallen relatively late, meaning that the proximity of the Easterrelated beef demand doldrums are far closer to the seasonal advances in beef buying ahead of Memorial Day at the end of May. This could either iron out the usual declines immediately following Easter, or it could make for a bit of jerking around demand-wise.
Gottschalk saw the cutout gains as shakey.
“The price increase this week looks to be more as a result of the lighter production last week than anything else,” he opined Thursday. “There have been limited forward sales thus far and the sellers are basically holding their breath. We continue to see trim quantities overhanging the market and expect some price correction there.”
He did note earlier in the week however that domestic demand factors “remain positive with employment and income continuing to post gains. For the latest reporting period, incomes increased by 2.7 percent versus the prior year.”
Last Monday saw Troy Vetterkind of Vetterkind Cattle Brokerage predicting the topping of the feeder market. Cattle feeders laboring under “grass fever” apparently didn’t get the memo as both cash and futures markets saw respectable gains.
“Demand for lightweight grazing cattle is strong and that is keeping strength in the entire complex,” Vetterkind noted Thursday morning. “The higher futures market this week is a supportive factor as well.”
Price ranges on medium and large 1-class (#1) steers weighing between 700-800 lbs. continued to edge upwards into the $150s. At the same time, all of the surveyed feeder auctions reported steady-at-worse sales in all feeder classes.
Colorado: The sales offering last week at the Winter Livestock auction of La Junta was half of what it had been the week before. Feeders of all ages and sexes were called mostly steady on moderate to good demand. This sale was a special bred cow and pairs sale with most of the offering being cow/calf pairs. Of the #1, 7-weight steers sold, prices ranged from $137- 149.
Iowa: The Bloomfield Feeder Cattle Auction also saw a decline in its offering last week. There were no comparisons to offer since the prior-week’s sale was a special calf sale and last week’s was a special yearling sale. Prices on the benchmark yearlings ranged from $134.50- 151.75.
Kansas: As a reversal, the Winter Livestock Feeder Cattle Auction of Dodge City sold over three times the number of cattle last week as it did the week before. Despite this, comparable sales of feeder steers were up $8-15 on 6- and 7-weights, and up $4-6 on 8- and 9-weights. Heifers over 600 lbs. were up $5-11. Calves were called firm overall, with particularly strong demand and a higher undertone noted on pre-conditioned cattle suitable for grazing. Good volumes of benchmark yearling steers sold between $137.25- 148.50. A group of 10 benchmark calves weighing 716 lbs. sold for $130.
Nebraska: The Sheridan Livestock Auction sold 2,610 head last week. As the first sale held for a month, there were no trends to offer, but a high undertone was noted, particularly on yearlings and weaned calves. Prices on #1, 7-weight yearling steers ranged from $141.75- 158.
New Mexico: The sales volumes were down at the Clovis Livestock Auction last week, but the prices were higher. Feeder steers were up $6-9 and heifers were up $6-7. Benchmark steers ranged from $136.75- 142.50.
Oklahoma: The OKC West-El Reno sale sold a spectacular 15,243 head of cattle last week over its twoday sale. Feeder steers were called $1-5 up, while feeder heifers and feeder calves of both sexes were up $5-8 with instances of up $10 on calves. Benchmark steers ranged from $134.50-145.
South Dakota: Fewer cattle sold for more money last week at the Hub City Livestock Auction. Steers under 1,000 lbs. were called up $3-5 with instances of up $8. Heifers under 700 lbs. were up $1-5 and heavier heifers were called up $6-10. Two large packages of benchmark yearling steers sold between $135-155, with averages on both ends of the $140s.
Texas: The Amarillo Livestock Auction sold more cattle last week than the week before, though there were few comparable sales. Feeder calves were said to have a higher undertone with yearlings trading mostly steady. A lot of 20 head of 732-lb. yearling steers averaged $135.15.
Like the live cattle futures, the near-term feeder contracts saw respectable gains. The April contract gained a net $4.05 to settle last Thursday at $137.80 and the May contract gained a net $4.63 to settle at $138.40. — Kerry Halladay, WLJ Editor