Fed trade light, but higher money

Cattle Market & Farm Reports, Editorials
Apr 4, 2005
by WLJ
— Northern cattle up $4-5; southern trade slow going.
Light to moderate trade happened in northern feeding areas last Wednesday at prices $4-5 higher than the majority of trade the previous week, while southern cattle feeders were still waiting on packers to come in at prices $2-3 stronger as of press time last Thursday.
Analysts weren’t sure that southern feeders would get the $94-95 live they were looking for, but were pretty confident that a majority of last week’s trade would end up at mostly $93. The slow interest by packer buyers in the south was said to be the result of packers buying enough cattle the previous two weeks to fill a large portion of slaughter spots during the first full week of April.
Through Thursday approximately 50,000 cattle moved in Nebraska in a range of $93-95 live, $148-153.50 dressed. In Kansas, only 2-3,000 head had moved through Thursday at mostly $93 live. Texas trade was called “virtually nonexistent.”
Stronger prices were said to be almost exclusively the result of feedlots being “extremely current” with their showlists. In fact, several sources said some cattle that were listed as available for sale were “greener than normal,” and would be sold only if the price was right.
Packers were reluctant to pay higher money for cattle due to margins being $20-25 per head in the red most of last week.
There was also some sentiment from analysts that a moderate post-Easter beef rally might be in store due to eastern consumers trying to get out of the “winter doldrums,” and getting into the grilling mode.
A slight rally in the boxed beef market through the middle part of the week made paying a little extra for slaughter-ready cattle a bit more tolerable, analysts said.
Choice boxed beef last Thursday was at $151.53, up from the previous Friday’s close of $149.01. Select ended Thursday at $140.82, up slightly from the end of the previous week.
Boxed beef trade volume was softer than two weeks ago. However, analysts said weather was once again behind some of the slow movement. They added that once the weather starts to warm up, particularly in the Midwest and Eastern Seaboard, boxed beef movement should pick up again.
The cow beef market remained strong with 50 percent lean hovering around the $70 per cwt mark, and 90 percent lean being between $158-159 per cwt.
Slaughter volumes last week were indicative of packers needing fewer cattle. Through Thursday, last week’s slaughter volume was 445,000 head, 9,000 fewer than the same period a week earlier and 21,000 fewer than a year ago. For the week ending March 26, 572,000 head were processed, compared to 590,000 head the previous week and 616,000 head for the same week last year.
Several analysts still indicated that a slaughter week of approximately 560,000 head would meet current beef demand, which further indicates packers needing fewer and fewer cattle compared to pre-BSE years. Last week’s total slaughter volume was expected to be around 570,000 head.
Live cattle futures gave some strength to last week’s cash fed cattle market, at least through midday Wednesday. Those contracts lost some of their momentum Wednesday afternoon, however, and that helped soften stronger price prospects in southern feeding states.
Early in the week, April live cattle got up to $91 before closing Thursday at $89.82.
calf prices
The spring stocker and calf market continues to be spurred on by abnormally large amounts of precipitation that has inundated the southern half of the country, southern West Coast and the Midwest. Spring grazing prospects continue to improve, and that is giving stocker operators the opportunity to increase stocking rates significantly compared to the past few drought years.
In most instances, calf prices were up another $2-5 from two weeks ago, with the one exception being the Northwest where drought conditions continue to put a damper on the spring grazing outlook.
It was not uncommon last week to see 400-pound-or-lighter steers bring $160 or more, and five- to six-weight steers bring $135-140 consistently.
Calf supplies continue to be tight and that was helping to elevate prices. Some analysts said if the USDA appeal of Judge Richard Cebull’s injunction against allowing Canadian live cattle into the U.S. was successful that short supplies wouldn’t be as big of a deal. However, they also said they didn’t see there being enough Canadian cattle to fully fill the void of fed cattle supplies.
Some analysts thought the Canadian border reopening might soften the calf market $3-5 initially, and maybe another $1-2 for a week or two following.
Prospects for cattle feeding profits last week, and last week’s developments with Pacific Rim countries over beef trade, helped spike prices for feedlot-ready cattle $2-3. At $95 northern cattle feeders were starting to show $30-50 profits at minimum, according to analysts. Some profits were said to be upward of $75-100 per head.
In addition, news that Japan was moving forward with plans that could reopen its border to U.S. beef before the end of the year had cattle feeders placing cattle that would be ready for market this summer and early fall.
Futures also rallied stronger last week on the news of Taiwan setting April 16 as its formal date for allowing U.S. beef back across its borders. The April feeder cattle contract last week got up over $108 per cwt, before settling back down to $107.67 at the close of business Thursday.
The Chicago Mercantile Exchange’s (CME) feeder cattle index, for steers weighing 700-850 pounds, was around $107.80 last Wednesday, over $1.50 higher than the previous Wednesday.