Market finds strength

Cattle Market & Farm Reports, Editorials
Aug 29, 2005
by WLJ
Fed cattle trade was much stronger last week on good cash sales volume. Trade broke lose Thursday at noon. Southern feeders established trade at $82-82.50 and northern dressed trade was $3-5 higher at $127-130. The Labor Day rally allowed some recovery on beef and prices, but late week trade at $2-3 higher was a surprise to most market watchers. Packers needed more cattle than many analysts expected.
Cattle feeders held their ground and packers were aggressively buying cattle to fill early September features. However, analysts still expect large front end supplies of fed cattle to continue to keep pressure on the market.
Packers were seeing positive margins in the $15 per head range and slaughter volume was reflecting the margins and the inventory buildup for Labor Day, the last big beef weekend for the summer season, but this latest buying spree of 130,000 head on Thursday won’t have much impact on Labor Day offerings.
Packers processed 661,000 head the week ending Aug.19 and were continuing to process large numbers at the beginning of last week. Mid week slaughter started to decline and through Wednesday packers were 8,000 head behind the pace from a week earlier, then they turned up slaughter toward the end of last week.
Boxed beef markets were strong leading into the holiday buying and were expected to start a small decline late last week and early this week. The Choice cutout was at $133.06 and Select at $124.04 reflecting the best Choice Select spread in quite some time.
Beef production year to date is just nine tenths of a percent below year-ago levels. However, cattle slaughter is 2.8 percent lower than a year ago. Heavy carcass weights are making a huge negative contribution to beef tonnage. The rule of thumb is that each additional pound in average carcass weight reduces slaughter by 7,000 head to produce the same tonnage. Thursday’s carcass weight report did show that steer and heifer carcass weights were starting to moderate.
Beef demand is starting to weigh in on the market. The rapid rise in energy costs is starting to force consumers into purchasing lower cost proteins; discretionary spending has suffered which, to a great degree, impacts beef sales. Cracker Barrel and Applebee’s restaurants were reporting that their customers where selecting lower cost menu items. Both restaurant chains have a large number of stores along interstate highways.
Feeder Markets
The market for feeder and stocker cattle was much improved last week with significant price increases attributed to a favorable on-feed report and continued good weather across much of the country.
As rain and moderate temperatures improve grazing conditions across the Plains, buyers are showing more interest in lightweight calves for winter grazing. Likewise, the cattle on feed report gave feeder buyers a reason for optimism, with data indicating the possibility of a decent winter and spring market. That combination boosted calf prices higher across most of the southern tier.
The Joplin, MO auction sold a good run of steers and heifers under 700 pounds at prices $4-6 higher than the previous week. Heavyweight steers were also steady to $2 higher. Buyer attendance and participation was called very good.
Prices across Oklahoma markets were also good although it was noted wet weather decreased the number of cattle offered. Regardless, attendance and demand were solid with buyers pushing the 7,600 head of cattle offered $2-3 higher than the prior week.
Texas prices were somewhat mixed this week. Lightweight steers and heifers under 500 pounds sold as much as $3-10 higher in several markets, however, there were some scattered reports of lightweight prices being down as much as $2-5.
There is still little activity in the northern tier markets, although the few sales reporting a significant supply of feeders indicated that demand was strong, leading to steady to slightly higher prices.
The Superior Video Auction in Sheridan, WY offered 121,000 head and resulted in fairly strong trade across all classes of cattle. Results for participating producers depended largely on quality, delivery date and vaccination program. Northern tier calves brought prices $5-7 higher than similar lots in the southwest which were $2 lower to $4 higher. Some of the representative sales from Superiors’ sale were: McFadden Enterprises, Victory TX, sold some red and black Angus steer calves weighing 400 pounds for $151.50 and the 380 pound heifer mates sold for $140.00; Cayuse Livestock, Cody, WY, sold some 425 pound black Angus certified natural, vac 34 steers for $162, 575 pound steers for $132.25 and the 410 pound heifer mates for $149.50; River Run Ranch, Lakin, KS sold 775 pound English exotic cross bred steers for $114.10; Morrill Weston and Sons, Cokeville, WY, sold some 750 pound black steers, $118.25, for October delivery; and Gaylen Ranch, Charles, SD, sold some 940 pound Angus, Limousin cross steers for $107.35.