Fed cattle trade slips after cutout stalls

Nov 11, 2008
Fed cattle trade slips after cutout stalls

Markets (from page 1)

a $40/head difference in fa vor of a 550 lb. calf versus a heavy yearling.”

Even so, he adds, the risk in purchasing lightweight calves is high if you are un able to keep a tight lid on feed costs. “Maybe people should be taking a look at these lighter weight calves, but you can’t just throw caution to the wind. You definitely have to buy them at a discount, then hedge your corn and hedge the cattle. The deferred fu tures look good to be able to do that, but the risk might still be too high.” Western Video Market’s Cheyenne sale offered 122,000 head, by far the most ever for that sale. Lots from all over the west and Plains were offered and were met by firm demand.

Steers from South Dakota in a lot of 148 head sold for $113.85 with a 750 lb. base weight. Montana steers in a lot numbering 140 head and weighing 950 lbs. sold for $108.00, while a group of 109 steers from Idaho and a base weight of 975 lbs. sold at $101.50. Seventy head of weaned steers from Nevada with a base weight of 800 lbs. sold for $107. Oregon steers in a 218-head lot and an 880 lb. base weight sold for $106.10, while another group of 215 head from the same state weighing 900 lbs. sold for $104.25. Steers car rying a base weight of 830 lbs. in a lot of 295 head from California brought $108.75, while a load of 67 steers from the same state weighing 740 lbs. sold for $111. Superior Livestock Auc tion sold 84,000 head of cattle on the first day of their sale which offered 181,000 total head. Averages from region one, which includes California, Nevada, Oregon, Washington and Idaho, saw steers with a base weight of 700-725 lbs. sell between $95-110.50, and 850-890 lb. steers go for $101-105.50.

Region two, which includes Montana, the Dakotas, Ne braska, Utah and Colorado, had 700-740 lb. steers selling for $104-115, while 850-885 lb. steers brought $106.75- 113.50. Region three, which includes Arizona, New Mex ico, Texas, Oklahoma, Ar kansas and Louisiana, saw 700-745 lb. feeder steers sell ing from $95 to $116, while steers at an average base weight of 850 lbs. sold for $101.50-108.25.

At the Oklahoma Nation al Stockyards in Oklahoma City, OK, a total of 7,223 head were offered, where compared to the week prior, feeder cattle and calves were steady with good demand for calves. Demand was moder ate to good for feeder cattle, despite corn futures which closed sharply higher on sale day. The quality of offerings continued to be below aver age with many consignments of No. 2 cattle included.

Steers weighing an average of 721 lbs. sold for $114.99, while 736 lb. feeder heifers sold for $108.78. The Joplin Regional Stock yards near Joplin, MO, of fered 4,711 head for sale last week where steers under 500 lbs. were steady to $2 higher, with weights from 500-700 lbs. steady and weights over 700 lbs. steady to $2 lower. Heifers were mostly steady. Demand and supply were moderate and the bulk of the offering con sisted of yearlings or weaned calves. Buyers paid $112.27 for steers weighing an aver age of 733 lbs. while 717 lb. heifers sold at $105.52.

A total of 4,150 head were received last week at the Bassett Livestock Auction in Bassett, NE, where the only testable weights for feeders were for those over 750 lbs. In that category, steers trended fully steady, with heifers trading steady to $2 lower. Receipts included a fairly even mix of fall calves and long yearlings. Feeder steers weighing 716 lbs. sold for $127.41 while heifers weighing 711 lbs. sold at $112.77.

Fed cattle Fed cattle trade was most ly lower last week as a sag ging cutout and weak fu tures markets failed to pro vide any lift ahead of the Labor Day holiday. The ma jority of trade in the south came in $1-2 lower than the prior week at $98-99 live while the Corn Belt cattle feeders traded steady to $3 lower in a range of $153 to $156.50 dressed and $98- 98.50 live last week. Ne braska trade was not fully developed at mid-day last Thursday, although light trade was reported at $155- 156 dressed.

Packers were buying for a holiday-shortened week and demand was reported to be moderate for cattle as most had already fulfilled orders to meet weekend demand.

The lackluster consumer demand also translated into a weakening cutout which was led lower by the middle meat complex, with ribs and loins showing the biggest

drop last week. Morning prices last Thursday stood at $162.67 on the Choice product, down 42 cents from the previous day’s level, while Select was up 26 cents at $157.30. Slaughter vol ume for the week stood at 505,000 head, down 7,000 from the prior week’s robust pace as packers slowed pro duction to match demand and maintain margins ahead of what is largely expected to be slowing domestic de mand. Analysts have been cau tioning that the pricing structure this fall is most likely to be driven by the demand side of the equation.

Fed cattle supplies are pre dicted to be tight through the fourth quarter, however, they cautioned that any weakness in movement on the consumer side of the equation could translate into weaker prices being paid for fed cattle supplies, regard less of supply levels. Export markets will continue to be a key factor in determining prices into next year as the domestic economy treads water and consumers direct grocery dollars to lower priced competing proteins.

Some of that expectation was already priced into the futures markets last week, which were showing some strength. August futures were up 65 points at mid-day last Thursday at $101.35 while October was up 80 points at $105.80 and De cember traded 60 points higher at $106.95. The high er prices on the Chicago Mercantile Exchange came despite the higher place ment expectations and surg ing corn markets. The belief that USDA’s corn forecast was off the mark, to the high side, added strength to the grain markets last week as crop tours got underway to examine actual crop condi tions in the field across the major growing regions.

Export sales last week continued to be very sup portive of beef prices with net sales of 20,200 metric tons reported by USDA’s Foreign Agriculture Service.

South Korea has jumped back into the market as a major player despite reports in the press that demand was weak. Last week, the Koreans were the largest foreign buyers of U.S. beef, with shipments totaling 8,500 metric tons, besting Mexico, the former heavy weight, by 800 metric tons. Cow and bull prices have been one of the highlights during the first half of the year, however, prices were

under pressure last week as focus shifted to other meats as a result of the higher prices being paid at the con sumer level for ground beef and cow cuts. However, de spite the backward slide in the market, prices remain very strong as a result of demand and a lack of sig nificant imports of lean beef for blending from foreign producers. Last week’s cow beef cutout stood at $139.62, compared to just $117.86 a year ago. The 90 percent leans last week was also sharply higher than 2007 levels, trading at $175.08, nearly $30 higher than the same date last year. The 50 percent trim market last Thursday was more than double year-earlier prices at $100.16. — WLJ