Cattle prices continue climb
Fed cattle prices opened with a surge again last week with wholesale beef prices continuing to rise.
Plains fed cattle traded last week at $113-$114 in Texas, with dressed sales in Nebraska at $182. Wednesday’s negotiated cash trade was inactive on light demand in the southern Plains and Colorado and limited on light demand in Nebraska and the western Plains. The southern Plains traded cattle at $116. The northern Plains came in slightly higher at $117, with dressed sales in Nebraska at $185. The western Corn Belt came in with the same trend at $116, with dressed sales also at $185.
Cattle and Commodity markets collapsed last week over concerns relating to European debt. The volatile market has pressured cash and futures cattle prices. Cattle traded at $182-$183 in Nebraska and Iowa, down $3-$4 from the previous week. This follows early week trade at $186. Lower prices are expected by the middle of this week.
Boxed beef has advanced for two straight weeks and some analysts expect sales to slow next week with the last summer three-day weekend around the corner. Analysts believe they may have reached their short term high. The current strength in the cattle market is, in part, a result of the market preparing for the final holiday weekend of the summer, according to Jim Robb, director of the Livestock Market Information Center.
Although the drought in the southwest is not over, parts of Oklahoma and other areas received much needed rain. The much needed moisture slowed the surge in the high placement in the southwest where record numbers of cattle have been moved into the marketplace because of the drought. Surprisingly, this increase in cattle moving to the feedlot early has had little negative impact on fed cattle trade, but the long-term implications of this drought with the shrinking of cowherds and the rising cost of grains will continue to play out. For now, shrinking cattle supplies, export beef and beef byproducts markets, and tight U.S. supplies of competing meats have continued to support cattle prices.
With feedlots holding cattle back to hit deferred month premiums on the futures market, packer margins have eroded, according to Robb. But with boxed beef prices continuing their upward climb, these margins may improve with Choice and Select cuts moving upward $1 to $2. Beef cutout prices now are about 17 percent higher than those of one year ago, when the Choice cutout averaged about $154 per hundredweight.
Grains also traded lower as European markets trended down. With the continued heat wave, new crop corn is maturing earlier than normal. This early maturing is tightening the gap from the old crop, adding to the already vulnerable market and pressuring basis values. In addition, competition from Russia and the Ukraine is pressuring export trade and values for corn and wheat. Analysts believe outside market actions will dominate crop production concerns.
The demand for feeder cattle varied greatly by region last week. In the northwest and west, heavier calves comprised most of the sales while in the south-central U.S., the lighter calves dominated as producers continued to send calves to town in order to cope with drought.
"There is still a lot of demand on the cash market. Feeder cattle are still worth a lot of money and feedlots still need them. The cattle might fluctuate a dollar, but the commodities market is strong," said Jake Parnell at Cattlemen’s Livestock Market in Galt, CA.
He noted that markets were expected to remain strong for the foreseeable future as demand continues to outstrip supply, particularly on the West Coast where there is ample forage available.
"This week’s market was steady to $2 higher and the cash demand has been very good. If you have cattle, people will be there to buy them. No matter what the futures market says," Parnell added.
That same sentiment translated to most major auction markets across the country last week and included Superior Video Auction’s sale in Sheridan, WY, last week, which saw excellent prices on the 182,000 head on offer. South-central steers in the 675-680 lb. class brought an average of $136.50 on 864 head. Lighter calves also sold well out of the south-central states with 420 lb. steers bringing $178. Northern sellers also fared well last week with steers in the 500-540 lb. class bringing an average of $154.39 on more than 1,550 head and 2,200 head of 600-640 lb. steers sold for an average of $150.42.
The higher prices weren’t just confined to video auctions last week. Improved moisture conditions in Oklahoma and Missouri helped to improve buyer’s moods. In Oklahoma City, OK, feeder steers sold $2-3 higher while 800-900 lb. steers traded $5-7 higher. Feeder heifers brought prices which were $2-5 higher. Steer and heifer calves sold $3-7 higher. Demand was reportedly very good for all classes of cattle on offer and market reports noted that a couple of inches of moisture last week had those in attendance thinking about the prospect of wheat pasture planting in the next few weeks. If that wheat does get planted, it could help to boost prices further in the weeks ahead.
"Things look a little better in my area of Enid, OK. They look more promising, but we have not yet received enough moisture to guarantee people will get excited about planting wheat for wheat pasture," said Rodney Jones, northwest area extension economist for Oklahoma State University. "It will add a cheaper source of gain for feeder cattle, and people will bid up accordingly. The only problem is that a lot of those cattle have already been weaned and are in a feedlot someplace. The feedlots may want to pull the cattle out and send them to the wheat pasture. If we get adequate rain to plant in early September, people will be looking for those cattle in late September and early October."
Further west in Bassett, NE, 400-500 lb. steers sold for $164 while 600-700 lb. steers averaged $143-$158. Heavier 800-900 lb. steers brought $132.50-$138.50 last Thursday.
Meanwhile in Amarillo, TX, numbers of cattle on offer were down from the previous week. Feeder steers and heifers under 600 lbs. were $2-$4 higher. — WLJ