Market continues to trade lower
Cash fed cattle trade got underway early last week at prices lower than the previous week. Trading was light to moderate in all feeding regions last Wednesday. Compared to Tuesday, live sales in the southern Plains sold in a narrow range from $95-95.50. There were more than 35,000 head traded in Kansas at $95-95.50 live basis and $152.50 dressed. Compared to the prior week, live sales were $1-1.50 lower in Nebraska where 29,639 head had been traded as of Thursday and in Colorado, cattle traded in a range of $96-97.50. In the western Corn Belt, dressed sales were called $2-2.50 lower at mostly $96. Dressed sales in the northern Plains and western Corn Belt were $1-3 lower from $153-156.
The cattle on feed report issued by USDA on March 23 showed market support for the next few months in the form of lower cattle on feed numbers and a reduction in the number of front-end ready cattle in feedlots. Cattle feeders have done a good job moving cattle over the course of the last two or three months and the current state of feedlots should help support the market in the mid-$90 range or better, according to market analysts.
Interestingly, the report did show a shift in the placement pattern, with northern tier feedlots placing larger numbers of cattle than southern states. High corn prices have fueled a debate about whether cattle feeding areas would shift to the north in favor of cheaper and more readily available corn supply. Although it remains to be determined whether the shift will be long-lived, it will certainly add a new dynamic to the markets over the next few years. This could be the beginning of several new opportunities for the northern Plains region.
Meanwhile, beef product movement remains soft and is expected to remain so for the near-term. However, as spring weather begins to warm things up across the nation and buyers begin to seek beef products for grilling, retail sales should pick up again. Once that begins to occur, many market analysts expect fed cattle prices to move from the mid-$90 range back toward the $100 level by mid- to late-April. Last week, boxed beef prices were showing the signs of some of that market weakness as poor weather conditions spread across the nation. Choice boxed beef lost $1.47 to trade at $152.63 by mid-day last Thursday. Select was trading $1.05 lower at $143.51. Packers were reporting fairly good boxed beef movement, with 468 loads of cuts, trim and grind shipped on heavy offerings of product.
Despite the slow movement of beef out of warehouses, packers had not reduced kill levels much from prior week or prior year levels. Last Thursday, packers harvested 120,000 head. That number was 4,000 head fewer than last week and last year. For the week to date total through last Thursday, packers had harvested an estimated 484,000 head, down from 499,000 the previous week, but above the year-ago tally of 482,000 head.
The cow beef market also worked its way lower last week, losing $1.01 last Thursday to trade at $104.54. The 90 percent lean was selling at $124.46, down $1 from the previous day and the 50 percent trim was trading at $55.68. Continued heavy slaughter of cull cows has pressured prices lower. Prices are now well below last year’s levels when the cow cutout value was over $114 during the same week. The 90 percent lean was nearly $20 below last year’s level, while the 50 percent lean was above last years price of $45.24.
On the Chicago Mercantile Exchange (CME), trade last Thursday closed mostly higher with the exception of April and May 2008 contracts, which closed down slightly. The up front contracts were slightly higher, with April adding 20 points to close at $96.37. June was up 52 points, closing at $93.95 and August posted the session’s largest gain, closing up 70 points at $91.72.
It’s easy to appreciate the sight of pastures greening up in the spring, especially after a long and hard winter. It’s even better for many cow/calf producers as the coming grass and a variety of factors continue to positively influence the feeder cattle market. This is good news for producers who have some fall calves to sell.
The demand for cattle ready to go to grass remains very good. Thin cattle brought significantly more money at auction markets across the West when compared to their heavier conditioned counterparts.
“These thin cattle are worth quite a bit more to me as the pastures around here are beginning to green up,” said Roger White, northeastern Colorado cattle producer. “I plan to turn out several hundred head and graze them through the summer. At least that's the plan.”
In addition to the bout of spring fever that is hitting the western regions as many areas are already making it to 70 degrees, the corn futures dropped sharply last week. May corn futures settled at $3.91 per bushel. This is a decrease of almost 40 cents since the beginning of March. The CME feeder cattle index also increased last week from $104.71 to $105.54.
“I’m sure with the decrease in corn futures and the optimistic outlook regarding the fed cattle market, cattle buyers are given a little more money to work with,” said White. “These feedlot owners can finally pay a little bit more for these feeder cattle and not take so much risk. From a cow/calf standpoint, this sure is nice to see.”
In Galt, CA, feeder steers and heifers were $2 to $3 higher. Steers averaging between 500 and 600 lbs. ranged between $107 and $118.50. Their heifermates sold between $100 and $109.50. Heavier steers averaging between 700 and 800 lbs. sold for $90 to $99 while heifers of a similar type and kind sold between $86 and $94.25. There were several heavier weight heifers. Those weighing between 900 and 1,000 lbs. sold between $72 and $86.25.
In Billings, MT, the overall quality was less attractive than the previous week and feeder steers were $2 to $4 lower. However, on thin fleshed five weight steers, there were instances of $4 higher. Feeder heifers were steady to $4 lower. There were instances of thin fleshed 500 lb. heifers being $4 higher. Demand was good for thin fleshed, high quality cattle. There was less demand for plain types. Steers averaging 535 lbs. called for $126 and thin heifers averaging 512 lbs. sold for $116.50.
In Fort Collins, CO, stocker steers and heifers sold with a firm undertone noted. A lower undertone prevailed on feeder steers and heifers over 650 lbs. Buyer demand was good on grazing classes and moderate to light for cattle entering the feedlot. Steers averaging 522 lbs. sold for an average of $119.25 while those weighing 695 lbs. sold for $105. Five weight heifers sold for $108 and the heavier females weighing 686 lbs. called for $92.25.
Just to the south in Dalhart, TX, feeder steers and heifers were mostly steady except for 500 to 700 lb. heifers which sold mostly for $1 to $2 lower when compared to the previous week. Trade was active and demand was good. Steers weighing between 500 and 550 lbs. sold for an average of $130. Similar females averaged only $107.
Oklahoma City, OK, had another large run last week with 7,330 head. Feeder steers were $1 to $3 higher and heifers were lightly tested but were $1 higher. Stocker cattle and calves were $4 to $6 higher. Demand was very good for all classes. There were many consignments of thin cattle offered with weighing conditions attractive to cattle buyers with grass cattle orders. Steers averaging 519 lbs. sold for $131. Fleshy steers at a similar weight only sold for $123 while thin cattle weighing 508 lbs. called for $139.50. Heifers weighing 524 lbs. sold for $115 while females averaging 625 lbs. sold for $111.75.
In Lexington, NE, over 2,400 head of steers and heifers trended mostly steady to $3 higher. Offerings with low flesh scores brought a significant premium. Thin steers averaging $524 lbs. sold for $139.93 while fleshy steers weighing 577 lbs. averaged $131.80. Heifers averaging 526 lbs. sold for $121 and heavier weight, fleshy heifers weighing 748 lbs. sold for $97.50.
To the north in West Fargo, ND, feeder steers weighing 650 lbs. and less sold $1 higher while heavier steers weighing 650-900 lbs. sold $2 to $3 lower. Feeder heifers sold unevenly steady. There was good demand, especially for lighter weight cattle. Five weight steers averaged $119.91 while those weighing 750 lbs. were worth $106.75. Heifers averaging 480 lbs. sold for $109.75 and the heavier females, which averaged 807 lbs., sold for an average of $93.19.