Video auction sees strong demand and good prices
Fed cattle trade was slow to get started last week as traders positioned themselves ahead of the Cattle on Feed Report. Early week trade in the Corn Belt was light in a range of $145-148 dressed basis while a few early trades in Kansas were reported at $91 live. The full range of trade was expected to wait until Friday, but analysts were calling the week’s action $1 lower than the prior week despite steady contract trade for much of the week.
Low numbers of cattle traded hands the prior week and showlists in most areas, particularly in the southern Plains, were larger last week as a result. However, formula numbers were down from the previous week and overall market-ready cattle numbers were well below year-earlier numbers. The tight supply of market-ready cattle has trended below year-ago levels which has helped to maintain prices at good levels year-to-date, although placement levels have been on the increase and analysts were expecting an increase for May placements when cattle on feed numbers were reported last Friday. Analysts’ expectations for placement numbers last month ranged from 15.2 percent above May 2009 to 37.1 percent higher, while marketings were expected to be mostly lower to flat with year-ago levels. Overall on feed numbers are expected to be even to perhaps slightly higher than year-earlier numbers, an indication that supplies will remain in check for the foreseeable future.
The boxed beef markets last week were trading unevenly steady with reports of a pickup in volume at midweek, according to Vetterkind Cattle Brokerage analyst Troy Vetterkind. He said the market was seeing better demand ahead of the upcoming Father’s Day and Fourth of July holidays with good buying interest reported in the rib and loin primals. Last Thursday at midday, Choice was trading down 26 cents at $153.51 and Select was off 10 cents at $146.30. Harvest for the week was expected to hit 665,000 head.
Analysts were predicting that boxed beef prices could be nearing a support level in the next few weeks, with the summer low predicted for later July. According to Vetterkind, demand for ground beef among consumers was helping to support the fed cattle markets, bolstering prices for end meats which will fit into grinding formulas.
"Coarse ground beef and boneless processing beef markets traded at higher money with increased demand and sales volumes yesterday as wholesale/retail buyers get product in line for the upcoming (Fourth) of July celebration," he said, noting that the holiday generally sees good movement of ground product.
"It sounds like hamburger processors could be a little short bought on grinding materials again. It was suggested as of late that imported grinding material from Australia/New Zealand has fallen short of expectations, and domestic grinders may have to rely heavily on U.S. product to satisfy upcoming needs," Vetterkind said. "This could be a little supportive to the overall cash beef trade for a week or two before we resume the down trend into late July/August time frames."
He called the market direction for beef cuts mostly sideways for the week ahead until holiday needs are met.
Also lending support to the market last week was an uptick in the export volume, which had been tapering off for the previous couple of weeks, adding a little drag to price levels. Last week’s reported export sales rose 61 percent from the previous week’s levels, although Vetterkind noted that sales remained 13 percent below the four-week average.
Increases were reported for South Korea, which topped the sales list last week with sales of 2,500 metric tons, and Mexico and Canada where sales rose to 2,100 metric tons each. Sales to Japan rose to 1,600 metric tons and Hong Kong sales tallied 1,000 metric tons for the week. Although export sales remain below levels reached during May, they remain respectable and prices are receiving a good deal of support as a result of the pick up in overseas beef trade.
The first big Superior Video Auction sale of the year last week, the Corn Belt Classic sale, saw excellent demand and prices offered for fall-delivery calves and yearlings. Superior sold more than 89,000 head, with active trade and good demand from buyers reported.
Southern Plains feeder cattle saw good prices and demand last week with more than 1,000 head of steers in the 800-840 lb. class for immediate delivery bringing an average price of $109.95 while more than 1,300 head of steers in the 750-765 lb. class for July delivery brought an average of $110.36. Lighter five-weight calves for October delivery sold in a range of $124.25 to $133. Lightweight calves from the southern Plains, with an average weight of 390 lbs., for November delivery brought a bid of $140 while an offering of 440 lb. calves, also for November delivery, sold for $132.
Prices for calves in the northern Plains, with a delivery of October/November, were reported in a range of $130-140 for four-weight cattle. Steers in the 500-700 lb. range in the same region sold between $120 and $130, prices which were several dollars higher than those reported at the same sale in 2009. Northern tier yearlings for immediate delivery brought a range of $105-115, with deferred August and September delivery dates selling from $112-116.
Cash feeder cattle are firm and will likely stay that way for the balance of the summer, providing corn doesn’t explode higher and deferred month live cattle don’t collapse, all of which seems unlikely as of right now," said Vetterkind of last week’s video sale results.
Elsewhere, auction market receipts are seasonally light in most areas, particularly in the Plains where heavy placement activity at feed yards over the past couple of months has absorbed available supplies of cattle. Consistently good grazing conditions in many areas have also led to a lack of cattle despite continuing good demand and strong prices in most markets. In regions where trends were available last week, prices were generally $1-2 higher.
For example, in Oklahoma City, OK, last week, feeder steers were called $1-4 higher while heifers sold steady to $2 higher. Steer and heifer calves brought prices which were reportedly steady to $2 higher on a light test. The market reported good demand despite heavy rains in the area which caused power outages and minor flooding which delayed the start of the sale.
To the west in La Junta, CO, last week, light steer calves were called steady at $120-132 while heavier weight classes sold steady to $2 higher in a range of $110-123. Lightweight heifer calves sold steady to $2 higher, from $105 to $123, while heavier weights were steady from $100-112.
The exception to the light numbers came on the West Coast last week where cattle are just beginning to come in from spring grass. Sellers are finding good demand and prices as there remains plenty of forage in most areas and buyers are snapping up cattle which are suitable to return to pastures. In Famoso, CA, last week, feeder steers were called $2 higher than the prior week with 600-700 lb. offerings selling from $96-102 while 825-900 lb. steers brought $88-98.75. Stocker steers and heifers were called steady to $2 higher last week with 425-500 lb. steers selling in a range of $100-114. Meanwhile in Madera, CA, the market was called steady with the prior week in a good test. Four-weight steers sold in a range of $100-110 while five-weights were trading between $94 and $114. Heavier 700-800 lb. steers brought a range of $85-90. — WLJ