Fed cattle rise to $83

Aug 21, 2009
by WLJ

Fed cattle rise to $83

Feedlot trade was slow last week as managers worked on their case for pushing prices higher after boxed beef prices posted light gains and packers ramped up their harvest levels at midweek. Asking prices were at $84 live and $132-134 dressed in most areas last Thursday with only light trade reported in Nebraska at $130 dressed. Live trade was predicted to rise to $83 last week, although trade was expected to hold off until after the release of the monthly cattle on feed report last Friday.

Vetterkind Cattle Brokerage analyst Troy Vetterkind said he expected trade to move mostly $1 higher last week as retailers begin to gear up for the Labor Day weekend features.

"Packer margins remain in the black and they are going to want to process cattle to take advantage of this situation," he pointed out. "Also, there has been a better demand tone to the beef market late last week and the first half of this week, which has packers needing cattle to kill so they can fill newly found beef orders."

As a result of those aggressive kill levels posted by packers last week, boxed beef prices at mid-day last Thursday stood at $141.91 on the Choice product, while Select traded at $134.92, both up slightly from the previous day’s trade. Harvest for the week through Thursday was estimated at 506,000 head, up 3,000 from last week and last year with the industry predicting a full week harvest of 645,000 head, up sharply from the prior week.

Vetterkind said he expects that the summer low is now in place at $81 and predicted the market should now hold above that level as the industry works toward smaller supplies of market-ready fed cattle into 2010. He noted that there has been strong buying interest on price drops at the wholesale level for middle meats. Likewise, when the price dips on the ground beef markets, there has been significant buying interest.

"In all, the beef market feels supported for a moment. There is decent inquiry for end meats for both quick ship and forward delivery. Retail accounts plan on featuring chuck and round meat along with ground chuck and ground round and as such are securing product for those ads," said Vetterkind. "It still feels like the boxed beef market should be supported in the lower $140’s, basis the Choice cutout, into next week."

Meanwhile, cow beef markets continue to absorb supplies of dairy culls with mixed success as the cows from the current round of herd retirements begin to make their way to market. The timing for beef producers is less than optimal just ahead of fall beef cow sales, however, cutter and boner cows last week in areas with light shipments of dairy cattle were bringing $40-$48 with breakers and premium white cows bringing $48-$54. In areas where large number of dairy cows are being shipped, prices remain just a couple of dollars lower than recent weeks.

The cow beef cutout was also $2 lower than the previous week at $104.81 as a result of the volume being produced. The 90 percent lean and 50 percent trim prices were also down $2 from the prior week at $129.53 and $67.18, respectively.

Competing proteins are still weighing heavily on the beef market. Record hog slaughter and a sharp decline in pork prices has made the meat an attractive feature for retailers and the lower absolute prices being offered in the pork and poultry items has shifted consumer buying interest away from beef for the time being. The consumers’ spending habits remain impaired and that has kept a lid on beef prices for the year to date. Unless there is a significant near-term change to help spur demand, advances in beef prices will be difficult to achieve regardless of the supply-side of the equation.

Feeder cattle

Last week was another big week for video sales with Superior Video Auction’s Big Horn Classic in Sheridan, WY, selling 228,000 head and Western Video Market’s sale in Cheyenne, WY, offering up 125,000 head. Prices were reportedly strong at both sales.

At the Superior Video Auction sale, 700 lb. steers from the northern tier were bringing a steady $100-$103, while the 800 lb. class steers were bringing mostly $95-$100. Calves in the 500 lb. class for fall delivery mostly brought a range of $107 to $115 and were heavily influenced by the shipping basis.

At the Western Video Market sale, feeder steers in the north-central region sold steady on good demand with 600-645 lb. steers selling in a range of $100-112.75 with those in the 800-840 lb. class bringing $97.50-101.75. Heavyweight 900-940 lb. yearlings sold in a range of $90.50 to $97.60. West Coast calves for fall delivery in the 510-520 lb. range sold between $114.25 and $115.50 while heavier 600-630 lb. steers brought $94.50 to $104. Heavier 850-885 lb. yearlings sold from $90 to $97 while those in the 900-935lb. range sold at $88-93.

Meanwhile, in cash auction markets last week, feeder cattle numbers were on the rise which created some mixed price action. Demand for yearling cattle remains good, while calf demand remains good for cattle which have had some preconditioning. Fresh weaned, loud lots were discounted as weather and health concerns remain a factor for buyers, particularly in the southern Plains. For example, in San Angelo, TX, last week, feeder steers and heifers sold steady to $1 higher on moderate trade and demand.

In Oklahoma City, OK, feeder cattle were called steady to $2 lower. Steer and heifer calves sold $2-3 higher on moderate demand, while, in Joplin, MO, steers and heifers sold fully steady with the prior week on moderate supply and good demand for all classes.

At Platte Valley, NE, last Wednesday, compared with the sale two weeks earlier, steers and heifers trended mostly steady with instances of $2 to $4 higher. Meanwhile, in Hub City, SD, last week, feeder steers were $2-3 lower than the previous week’s sale on a light test. Feeder heifers were too lightly tested for an accurate market comparison. Demand for feeder cattle, at the sale, was called good. — WLJ