Fed cattle market slips, feeders continue strong
Many southern feedlots, however, were still holding out for better money last Thursday, with some expecting that significant trade could hold off until Friday last week.
The Chicago Mercantile Exchange (CME) saw long liquidations, substantial corn price increases, and the triggering of sell stops cause a sharp drop in live cattle contracts last Thursday. At the close of the day, June was down $2.12, closing at $91.27. August fell 200 points, ending the session at $90.57 and October shed 165 points, closing at $94.42. At the close of business last Thursday, all but the August 2008 contract showed triple digit losses for the day.
A lack of beef buying interest at the retail and wholesale level, despite large discounts in the beef cutout values, added to the problems last week on CME. The Choice cutout was up slightly at midday last Thursday, trading at $156.10 and Select was down 26 cents to trade at $144.55 with only moderate movement. Those prices represent a drop of more than $6 from week earlier levels. The decline was expected by many to spur some movement out of packers’ cold storage warehouses to fill spot demand, which remained lackluster last week. Meanwhile, forward contracting for the Choice middle meats to fulfill summer demand remained a bright spot in the boxed beef markets. The news that Creekstone had finally managed to move beef into the South Korean marketplace also helped improve the attitude toward some of the end cuts. To add to that sentiment, both Tyson and Swift said last week they would begin preparing shipments intended for Korea. Those cuts bound for the Asian market are out of favor with consumers in the U.S., however, chuck and short ribs items received a boost as a result of an expected surge in demand. That increase in trade will only serve to add value to beef carcasses here in the U.S.
Packers, who were once again facing negative margins last week, were expected to begin trimming production schedules in the week ahead. However, through last Thursday, they managed to continue harvesting large numbers of cattle to fill orders. Choice beef in particular is becoming seasonally more difficult to find, leading packers to chase the market for high grading cattle. Last Thursday, packers harvested 123,000 head, compared to 120,000 a week earlier and 126,000 head on the same day in 2006. For the week to date tally, packers had worked through 490,000 head, just 2,000 fewer than the previous week but well above the 2006 period, during which packers killed just 412,000 head.
Boneless cow beef markets were mostly steady last week as a result of the continued solid demand from the grinding sector for 90 percent lean cow beef and what may be the start of a slow down in cow slaughter volume. Fed cattle 50 percent trim also bounced back as buyers began securing product for the freezer at low prices. Last Thursday, the cow beef cutout value rose slightly to $115.43 in morning trade. The 90 percent lean moved higher to $144 and the 50 percent trim traded at $57.46.
Feeder cattle prices remained mostly steady and in some instances, $2 to $5 higher across the western region last week. In spite of the higher corn prices last week, feeder cattle prices continue to show strength. Derrell Peel, Oklahoma State University livestock marketing specialist, attributes this to several factors. Fed cattle prices remain strong and there is a noticeable reduction in cattle imports from other countries. In addition, much of the western region continues to receive some much needed moisture and this is leading to an increased demand for stocker cattle to turn out on grass. This is evident as last week, lightweight cattle that were thin in type were worth significantly more than their fleshy counterparts.
Furthermore, cattle producers are feeling much more confident about building up their herds by retaining more females as a direct result of the moisture and the coming on of grass. This results in less feeder cattle offerings at auction markets and a decrease in the number of cattle placed on feed.
Higher corn prices are still affecting the feeder cattle market. It is becoming more common to retain stocker cattle for a longer amount of time in an effort to place them in feedlots at heavier weights.
“The market is encouraging more forage-based stocker gains and heavier placement weights for cattle entering feedlots,” said Peel.
“As the price of corn continues to increase,” said Carla Todd, producer from a central Wyoming cow/calf operation that retains ownership of cattle though a family feedlot, “that grass continues to look better and better everyday.”
In Famoso, CA, stockers and feeders held steady on a quality run. There was a big demand for stocker cattle, especially the greener kinds weighing 450 to 500 lbs. Many buyers had going to grass orders. There was also a big demand for feeder cattle. Once agin, those thin in type and kind weighing between 700 and 850 lbs. were the most valuable. Stocker steers weighing between 425 and 500 lbs. averaged $125 while thin feeders weighing between 725 and 800 lbs. were worth an average of $101.75. Feeder heifers that weighed 725 to 850 lbs. sold for $90.50.
To the north in Davenport, WA, feeder cattle remained steady with light to moderate demand. Steers averaging 450 lbs. sold for $119 and their heifermates were worth $97 to $102.75, with the higher price being paid for thinner cattle.
To the east in West Fargo, ND, lighter feeder steers weighing 650 lbs. and less sold $1 higher. Heavier steers sold $2 to $3 lower when compared to the previous week. Feeder heifers sold unevenly steady. There was good demand, especially for lighter weight cattle. Steers averaging 525 lbs. sold for and average of $119.91, while one set of thin steers weighing 750 lbs. called for $106.75. Heifers averaging 582 lbs. were worth $107.74 and females that weighed 720 lbs. sold for $93.93.
In La Junta, CO, steers and heifers were steady last week as were the yearling heifers. Steers weighing between 505 and 575 lbs. sold for $125 to $129 and a half load of fancy, five-and-one-half weights, called for $130. Females averaging 590 lbs. sold for $109 and yearlings, weighing between 705 and 745 lbs., were worth $98.75.
In McCook, NE, steers and heifers remained steady last week. One set of steers weighing 470 lbs. in thin condition, sold for $147.50. Another set weighing 488 lbs. were only worth $137.79. Heavier weight steers were also steady with 44 head of steers, averaging 761 lbs., sold for $106. Five weight females were worth $119.50.
To the south in Salina, KS, feeder steers 350 to 600 lbs. and heifers 400 to 650 lbs. were steady to firm on a fairly light test. Steers that weighed 600 to 1,000 lbs. and females weighing 650 to 850 lbs. were $1 to $2 lower. Steers averaging 525 lbs. sold for $126.98 and their heifermates sold for $115.58. Heavier steers weighing 775 lbs. were worth $106.79 and their female counterparts sold for $97.92.
Oklahoma City had another large feeder calf run last week with almost 7,000 head. Feeder steers and heifers were $1 to $3 higher. Stocker cattle were $3 to $5 higher with most advance on the six weights. Demand was very good overall for feeder cattle with several northern orders present. Stocker calves weighing an average of 632 lbs. sold for $128.21. Eight weight steers were worth $106.41 on a weighted average. Five weight females called for $112.85, while their fleshy counterparts sold for only $106.10. The yearling females weighing 865 lbs. sold for $93.
Further to the east, in Joplin, MO, steers sold steady, except those weighing 550 to 700 lbs. They were $2 higher with an increase on long time weaned steers. Heifers weighing 400 to 600 lbs. were $2 to $5 lower. Demand and supply was moderate. Steers weighing between 500 and 600 lbs. averaged $123 while those fleshy in type at the same weights averaged $113.75. Yearling steers averaging 750 lbs. were worth $106.25. Five weight females were worth $108 and their fleshy counterparts were only sold for $102.25. Yearling females weighing between 735 and 800 lbs. sold between $93.50 and $97.
In Clifton, TX, feeder heifers and steers remained steady last week. Trade was active and demand was good on all classes. Steers weighing between 500 and 600 lbs. sold between $112 and $123.50. Their heifermates were worth $110 to $115.