Fed trade continues at steady prices

Markets
Sep 25, 2009
by WLJ

Fed trade continues at steady prices

Northern tier feedlots started moving cattle last Wednesday at prices which were steady to $1 lower than the previous week at $128-130 dressed and at $83-83.50 live. Several reports of heavy cattle being discounted added to the downward trend for feeders in the region. However, it appeared that most of those heavy animals are close to being cleaned up and a couple more weeks of aggressive marketing could resolve the issue, turning around the downward price pressure in the north and Corn Belt. Elsewhere, fed trade was slow to develop with market analysts predicting that southern Plains feeders would be able to push live cattle prices higher. Trade in the south was expected to come in steady with the previous week in a range of $84-84.50 live.

The mostly steady trade came after boxed beef prices managed to maintain their levels and the contract trade staged a good rally last Wednesday which helped support cattle feeders’ position, pressing for better prices. Packers also appear to be short bought in some areas, particularly in the north where buying has been lighter than normal the past several weeks, adding to the cattle weight problem which started to develop earlier in the summer there. Vetterkind Cattle Brokerage analyst Troy Vetterkind noted that packer demand for those heavy cattle showed improvement last week and predicted that packers in the region may need to fill orders into October which will help inventories reach a more current state, especially as demand begins to show signs of seasonal improvement. Vetterkind said those factors should be positive for cattle prices for the next four to six weeks.

Cattle slaughter has also started to show some signs of improvement over last week with production through last Thursday estimated at 585,000 head, 10,000 over the previous week when at least one major packer trimmed the weekly production schedule. That helped to support boxed beef markets and prevented any major slip in prices while helping to spur some good movement into retail channels. There was particularly good demand for rounds and Select rib cuts. Vetterkind reported that although there is soft demand for chuck cuts, buyers should begin looking to book ribs and loins soon which will help to support cutout values as the more expensive cuts help to boost composite prices. He also noted that last week’s export sales also showed some promising signs with reports that Taiwan may soon relax beef trade restrictions, "which would mean increased business into that region, but more importantly, could go a long way to influence other Asian customers to do the same," he said.

Cow beef prices last week were under pressure again as demand for growing supplies showed signs of weakness. Cow beef cutout prices were down to $103.37 last Thursday, down just slightly from the prior week. The 90 percent lean product was down $1 from the previous week while the 50 percent trim price dropped nearly $3 from the prior week to trade at $50.88 as ground beef demand slowed significantly as portions of the nation experienced their first bouts of cold weather, seasonally dampening demand for grilling products.

The live cattle futures last week were still holding strong in the deferred months, offering a glimmer of hope for cattle feeders to lock in some potential profits early next year, although contracts through the end of the year have seen some pullback in pricing as cattle feeders stack heavy placements into feedlots for December and January marketings. At midday last Thursday, the contract trade was lower across the board with October moving 50 points lower to $85.95 while December was down 60 points at $85.15 and February was off 35 points at $85.80.

Feeder cattle

Feeder cattle markets last week were mostly lower, particularly in the southern Plains where heavy rains created muddy conditions on ranches and feedlots alike. The rainfall also served to prevent wheat planting in Texas and Oklahoma, which in turn dampened auction market demand for stocker cattle. In Oklahoma City, OK, last week, a big run of spring calves were met with mixed demand and mostly lower prices. Feeder steers and heifers sold $1-3 lower while steer and heifer calves were called $3-7 lower on moderate demand for all classes. Meanwhile, in Joplin, MO, where flooding hit the area and reduced receipts, prices were also lower with the biggest discounts coming on mid- to heavyweight fleshy, unweaned calves. Steers under 450 lbs. were called steady to $2 lower while those from 450 lbs. to 650 lbs. were $3-5 lower. Heifers under 450 lbs. sold steady while those in the 450-650 lb. range were $1-4 lower and yearling steers and heifers were steady to $3 lower. Demand at the sale was called moderate to light on moderate supply.

Farther west in Colorado and Wyoming, some light snow did little to put a damper on prices which were mostly higher on all classes of cattle. In Torrington, WY, heavy steers in the 700-850 lb. class were called steady to $2 higher while 850-1,000 lb. cattle were called steady to $2 lower; heifers over 600 lbs. were steady to $2 lower on good demand. Meanwhile, to the south in La Junta, CO, steer calves sold $1-3 lower while heifer calves were steady to $1 higher and yearling feeder steers and heifers were called steady.

In western markets, calf prices were steady to mostly lower on light numbers at most markets. In Prescott, AZ, last week, prices were fully steady on steer and heifer yearlings and calves, while farther west in Cottonwood, CA, calves and yearlings were called $2-4 lower last week.

Farther north in Junction City, OR, feeder cattle were reportedly slightly lower than the previous week’s sale on a light run of cattle while in Burley, ID, prices last week were sharply higher with mid-weight steers selling $2-7 higher while heavier offerings were as much as $10 higher. Heifers sold mostly $2-3 lower. — WLJ

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