Futures gains lost; beef picks up
Disappointment followed on the heels of excitement. After the impressive upswing in the week of Sept. 18-22, last week was a quick return to the recent status quo for prices.
Very few cattle had been confirmed sold last week by Thursday afternoon. Only 7,000 head had been reported sold—most of them on Thursday—at $107 live and $172 dressed. These prices were steady to slightly higher than the cash fed trade from the week before.
Last week saw the cratering of the futures after a much-anticipated run up. Some attributed the sharp decline—almost limit-down on Monday’s trade—to the surprising reality of the recent Cattle on Feed report. Others however pointed out that the futures were very overbought and the decline was predictable profit-taking.
By settlement on Thursday, some of the losses have been made up. Wednesday’s trade saw tripledigit gains in most contracts. Thursday saw the October contract settle at $108.97 (a net $2.60 decline from the prior Friday settlement) and the December contract settle at $115.05 (down $2.37).
“The cattle futures trade continues to be supported by index fund buying in the deferred month contracts,” Troy Vetterkind of Vetterkind Cattle Brokerage reported Thursday morning.
“Spot October live cattle remains the laggard as there is liquidation ahead of first notice day and uncertainty over the outcome of this week’s cash market.”
The beef cutout prices saw some (relatively) impressive gains given their weeks of steady trade. By close of trade last Thursday, the Choice cutout had gained a net $4.81 to close at $196.41. The Select cutout had gained a net 38 cents to close at $189.11.
“Beef is a primary magnet to win the battle over consumers’ dollars,” Andrew Gottschalk of Hedgers Edge noted last week, adding later that consumers have more dollars lately.
“According to the Fed’s Survey of Consumer Finances (conducted every three years), median household income-before taxes adjusted for inflation-rose 10 percent, to $52,700 during the 2013-2016 period.
Household median net worth grew 16 percent during the same period.”
Cash feeder cattle demand continued to keep up a good pace in most of the surveyed auctions. Price ranges in medium and large 1-class (#1) steers weighing between 700-800 lbs. increased, but several auctions reported prices slipping. Numerous reports noted that unweaned calves, or even calves that were not long-weaned, saw weak demand.
California: The Cattlemen’s Livestock Market in Galt saw a larger sale last week with steady prices. However, the price range on #1, 7-weight steers increased to $130-150.
Colorado: At the Winter Livestock of La Junta, almost 1,700 head sold. Prices were steady to $1 higher on light steer calves, and up $3-5 on steer calves over 550 lbs. Heifer calves followed roughly the same pattern. Yearlings were mostly steady for both sexes, but 8-weight steers saw prices of up $5-8. A group of 92 head of #1 yearling steers averaging 729 lbs. brought $154.11.
Kansas: The Winter Livestock Feeder Cattle Auction of Dodge City sold less than half of the cattle last week as it sold the week before. Heavy rains were blamed for the reduced offering. A limited supply of 5- and 6-weight steers sold up $6-8, while 7- and 8-weight steers were up $2- 4. Heavier steers were called steady and there were too few heifers or calves for market tests on those classes. A pair of benchmark yearling steer offerings ranged from $160.10-164.
Missouri: Receipts were down last week at the Joplin Regional Stockyards. Calves were called $5-8 lower with yearling feeders trading unevenly steady to down $3. Demand for unweaned calves was called light, while moderate to good demand was reported for longweaned calves and yearlings. Two groups of benchmark yearling steers ranged from $146-158.
Montana: The Miles City Livestock Commission was staying steady on receipts last week, but most of the steer calves that sold were mixed. Pee-wee steer calves sold up $4-6, while 4- and 5-weight steer calves were down $4-9. There were too few of any other class of feeder cattle for accurate market trends. There were no #1, 7-weight steers sold, but a six-head group of #1 steer calves averaging 602 lbs. sold at $159.51.
Nebraska: The Sheridan Livestock Auction Co. sold only a fraction of the number of cattle last week as it did at the previous sale. The offering was majority feeders with all the offered feeders being over 600 lbs. However, there were too few comparable sales for any market trends. There were no benchmark steers reported sold, but a pair of #1, 8-weight offerings ranged from $151.50-157.25
New Mexico: Sale receipt volumes were halved last week and prices were down at the Clovis Livestock Auction. Feeder steers under 600 lbs. were down $10- 12, while heavier steers were steady to down $2. Heifers were down $8-12 and steady to down $3 along the same weight breakdown. A pair of benchmark calf offerings ranged in price from $125-134.
Oklahoma: Volumes were steady at the Oklahoma National Stockyards, but prices were mixed. Heavy feeder steers were up $1-5 while those under 800 lbs. were down $4-7. Yearling heifers were down $1-4, while heifer calves were down $3-6. Demand was called light for calves weaned less than 60 days. Benchmark yearling steers ranged from $144-155 and steer calves ranged from $140-145.
South Dakota: The sales volume almost doubled last week at the Philip Livestock Auction. Feeder steers saw price increases that ranged from $10-12 for light steer calves to up $3-5 for heavy yearlings. Prices for heifers ranged more widely with pee-wee calves and 5-weights being up $10, but 4-weights being down $4-6. Nine head of #1, 711-lb. yearling steers sold at $164, and an 82-head group of #1, 702-lb. calves sold for $176, though there was no explanation for that unusually high price.
Washington: The Stockland Livestock Auction sold three times the volume of cattle last week than in its prior sale. Despite this, stocker and feeder cattle were called up $4-11. Trade was called very active and buyers were described as ignoring the recent Cattle on Feed report. There were no #1 cattle reported sold, but the medium and large 1-2 class 7-weight steers ranged from $134-147.50.
Wyoming: The Torrington Livestock Commission almost doubled its sales volume last week. Still, yearling feeders were described as steady to up $3. Calves under 650 lbs. were $4-7 higher and a higher demand noted for the lighter calves. An 86-head group of #1, 785-lb. yearling steers went for $155.45.
Much like the live cattle futures, the feeder cattle futures tanked last Monday. Several contracts saw limitdown trade with the rest of the board being near limit down. Wednesday also saw triple-digit gains for the feeder futures. By Thursday’s settlement, the September contract had lost a net 63 cents at $152.77 and the October contract lost a net $3.15 at $152.95. — Kerry Halladay, WLJ editor