Spring fever hits markets

Markets
Mar 23, 2012
by WLJ

Spring fever or March Madness is upon us and the summer-like temperatures have exacerbated the symptoms. Farmers are not immune, as sightings of corn planters were reported throughout the Midwest and few seem worried about an April cold snap.

“It looks like a lot of eastern Corn Belt farmers are hoping to have some early-harvested corn to use in capturing old-crop premiums before the main harvest season gets underway.Things could get exciting in the markets if there would happen to be widespread frost in late April,” according to Bob Wisner, Iowa State University.

Fed cattle started the week off slow with little movement, but activity picked up in the north on Wednesday. In the Southern Plains, live sales traded steady at $126. In Nebraska, live sales traded $1 higher from $127-128 with dressed sales steady to $2 higher from $202-204. In Colorado, live sales traded $.50-1 higher than the previous week, from $127- 127.50. Western Corn Belt trade was steady to $1 higher from $126-128 with dressed sales mostly $1 higher and the bulk of sales were at $203.

USDA reported 12,000 head of cattle sold in Texas/Oklahoma at $126 live, 25,000 head of cattle sold in Kansas for $126-127 live, 21,000 head of cattle sold in Nebraska for $2.02-2.04 dressed and $127-128 live, 5,000 head of cattle sold in Colorado for $127-127.50 live, and 11,000 head of cattle sold in Iowa for $127 live and $2.02- 2.04 dressed.

Overall slaughter is down, credited to tight supplies and higher carcass weights. Heifer slaughter is down notably as producers are beginning to hang on to valuable replacement heifers. Year-to-date beef production is down 3.7 percent.

The average dressed weight for slaughter steers for the week ending on March 3 was 850 pounds, down four pounds from the week before, but up 21 pounds from the same time last year.

Packer margins remain in the red, with final numbers for the week averaging around 610,000. “Our demand analysis suggesting any production level over 618,000 would exert selling pressure on beef cutout values has proven to be correct. Production under this level should begin to lend support to the product. Production the previous week was estimated at 619,000, down from 631,000 head the previous week and 619,000 head last year. Beef production year to date was down 3.7 percent from the prior year,” according to Andy Gottschalk with Hedgers Edge.com.

Markets (from page 1) The spring weather has people looking for bargain meats for the grill. The boxed beef market was lower with the Choice cutout closing down $2.12 at $188.97 on Wednesday and the Select cutout closing down $.66 to settle at $188.32.

“The entire beef complex was lower last Wednesday as packers had to offer discounts on all primal sections of the beef carcass as well as ground beef and boneless beef. Spot domestic demand remained on the defensive and this is probably going to be the case until we get into the first couple weeks of April. I do think we can see a minor rally in the beef market going into the middle of April but it probably doesn’t start until some time middle/latter part of this week,” said Troy Vetterkind, with Vetterkind Cattle Brokerage.

The talk of the week centered around beef import numbers exceeding exports for the first time since 2010. January exports were down 8 million pounds (4.4 per cent) compared to a year ago, largely because Hong Kong purchased 7 million pounds less U.S. beef than in January 2011. January beef imports were up 43 million pounds (28.8 per cent) compared to a year ago and the highest since June 2011. In total, 8.6 per cent of January beef production was exported. Beef imports equaled 9 percent of January production, according to analysts.

Feeder cattle

Around 94 million acres are expected to be planted this spring, compared to 91.9 last year and 88.2 back in 2010. A decent harvest could more than double our ending stockpiles in one year, which could make some producers wish they were weaning thousanddollar calves.

Lower fed cattle prices have put some downward pressure on feeder values in recent weeks but the CME feeder cattle index last closed at $154.32/cwt, some $25/ cwt or 19 percent higher than the same period a year ago and almost 50 percent higher than where it was back in 2007 before the start of the recession and the ramp up in corn prices.

According to CME reports, one reason why feeder supplies are not even tighter is due to the surge in the supply of feeder cattle coming from Mexico. The number of feeders from Canada remains limited. In 2011, the U.S. imported about 1.4 million head of feeder cattle from Mexico, about 188,612 head or 15 percent more than the year before. Feeder cattle imports from Canada in 2011 amounted to only about 76,000 head, down 60 percent from the previous year. Through March 17, the U.S. has imported about 370,000 head of feeder cattle from Mexico, some 21 per cent ahead of the comparable period a year ago.

Feeder cattle receipts were estimated at 334,200 head versus 319,800 head the prior week and 360,200 head last year.

Feedlot-bound yearlings lacking suitable condition for grazing sold unevenly steady to $2 lower. Buyers remained reserved following the previous week’s lower prices as they watched to see if the fed cattle market would rebound back toward $130 and if recent losses were a mere hiccup caused by sharp losses on the CME cattle board.

Kingsville, MO, Livestock Auction saw a load of 1,005 pound steers that brought $145.75 the previous week. New crop calf prices were predominantly lower for the second straight week with fall-born calves selling steady to $5 lower and even Nebraska was no longer able to get $200 for a flat 500 pound soft calf.

However, old crop stockers and thin-fleshed yearlings continued higher with feverish bidding as this year’s early spring has turned pastures green ahead of schedule and grass backgrounders want to reap the rewards immediately. True stocker-type cattle sold firm to $5 higher and there’s no set weight range or class description for the grouping other than being roughhaired, rugged, thin, empty, and showing slightly more age than size.

Analysts call this compensatory gain and backgrounders know these kinds will put their head down upon being unloaded and rarely lift it up, other than to ruminate or get a drink. At current price levels of feeders and feed, savvy cattle growers wouldn’t hesitate to turn out an 800 pound cutting bull if they thought he could put on a quick gain.

In Oklahoma, feeder steers sold steady. Feeder heifers were steady to $2 lower. Stocker steers and steer calves were steady to $3 higher. Stocker heifers and heifer calves were steady to $2 higher.

In Texas, feeder steers and heifers were mixed and uneven with steers over 800 pounds and heifers over 700 pounds $2-5 lower from the extreme top the previous week.— WLJ

{rating_box}