Cash trade slow to develop
No one seemed in a hurry to buy fed cattle last week. Bids were light and sporadic to nonexistent most of the week. Through midday Thursday, bids of $121 live in the south Plains made Monday, and repeated throughout the week, and a Thursday morning bid of $187-189 dressed in Nebraska were the only things to develop. Asking prices by cattle feeders ranged from $124-126 in the south Plains and $192-195 in the Corn Belt.
Cattle feeders are reportedly sticking to their guns once again and passing over lower bids on rumors of packers being short bought and export demand picking up. Analysts predicted trade would develop at $122-123 live with some pressure put on prices because of the shuttering of a Canadian plant over the E. coli recall pushing more fed cattle into the U.S. market.
Though all futures, fed and feeders, were up by midday Thursday, advances were slow and not at all what they could have been given numbers posted earlier in the week. Compared to the prior week’s Friday close of $122.07 for October fed futures and $124.70 for December, October gained only 26 cents with $122.33 and December with 90 cents at $125.60. This is contrasted with almost $2 gains seen in the contracts late on Tuesday.
“Part of the weakness in the futures [Wednesday] may have been linked to the ongoing E-coli problem in Canada as the recall of beef from XL Foods was expanded yesterday,” said Troy Vetterkind of Vetterkind Cattle Brokerage.
“XL’s Brooks, Alberta, plant was suspended from slaughtering cattle last Friday and that suspension looks to last awhile until the company can prove to the Canadian Food Inspection Agency that it is following sanitary protocols. This will undoubtedly have a few more Canadian fed cattle entering the U.S. slaughter mix at a time when Canadian cattle already had a price advantage over U.S. fed cattle.”
The Choice cutout value climbed steadily throughout the week, while Select stayed mostly unchanged. At the close of the prior week, Choice stood at $188.98 and Select at $177.85. Over the course of last week up to midday Thursday, Choice gained $2.48 at $191.46. Select on the other hand only gained 14 cents over the week, seeing Thursday at $177.99. This, of course, widened the spread to more than it’s been in a few months; $13.47.
Consumer demand is still said to be sluggish with consumers turning to cheaper pork and poultry offerings being pushed more readily in stores. Though it hasn’t been mentioned officially or by respected analysts, anecdotal reports and social media hype suggest consumers may have been turning to pork buying ahead of what some are jokingly (others not so jokingly) calling “the Aporkcalypse.”
A recent study out of Britain has garnered public attention because of inaccurate media conclusions that the study predicted a “bacon shortage.” This has caused a wave of sometimes amusing, sometimes ridiculous, social media reactions. What actual impact this study and its misrepresentation in the U.S. media have had on consumer behavior is uncertain.
Chuck and other shoulder cuts have lost their place in the sun from earlier weeks. With domestic retail demand down, there have been slight discounts in the entire beef complex, or otherwise steady. Export demand has been up and is holding up values despite less than spectacular domestic interest.
The most recent export sales information placed it at 15,800 metric tons, up 61 percent from the prior week which should be remembered was unusually low.
This trade volume was also up 14 percent from the four-week average. Primary destinations were Mexico, Japan, Canada, South Korea and Russia.
As the Canadian ground beef recall has continued and cull cow slaughter continues above demand for ground, the value of 90 percent trim has taken a bit of a hit. Compared to the $202.95 at the close of the prior week, 90 percent trim stood at $201.11 as of Thursday midday. Fifty percent trim fared better. At $47.33 on the prior week’s Friday afternoon, by Wednesday afternoon last week it had increased in value to $52.92. No 50 percent trim was traded Thursday morning to help set an estimated value beyond Wednesday.
The prior week’s slaughter volume was readjusted upwards at the beginning of last week, from 623,000 head to 651,000 head. This unexpected additional product also likely had an effect on cut specific values. Last week’s production rate was estimated at 635,000 to 640,000 head. As it stands, packers are losing roughly $30-50 a head.
Yearling feeders are getting harder and harder to find. Many auctions are reporting few or no 750-pound steers on which to base a market trend. When they could be found, they were generally bought readily.
In the copious sales in Missouri, feeder steers and heifers were all over the map in terms of pricing based on location and quality, though demand was mostly good. Yearling steers sold mostly steady, but with a reported range of down $6 to up $5 with interest tending towards lighter animals in the steers and mid-weight heifers likely destined as replacements. Calves were almost unanimously down as much as $8, but with one instance of up $3 for some particularly nice steer calves. Slaughter cows and bulls were consistently down $1-2.
Cooler weather and added rainfall has had a great impact on fall pastures in Missouri. The conditions are reportedly brightening spirits and aiding in the speed of the grain harvest. That said, more rain would be appreciated.
In New Mexico’s Clovis auction, feeder steers were trading up $5-6 with reported instances of up $10 on lighter animals. Heifers were called steady to strong except lightweights, which were up $9. Slaughter cows and bulls were $3-4 up on active trade with good demand. A 750-pound steer ran anywhere from $133-144.
At the El Reno Livestock Auction in Oklahoma, feeder steers sold up $1-3 while heifers were not well tested. Calves were well-received at up $6-10 for steer calves and up $3 for heifer calves. Weaned calves were particularly attractive to buyers.
Yearling 750-pound steers were light in availability but selling around $135-138 where they sold.
“Yearling cattle movement, which is what the CME futures trade off, has all but dried up,” said Vetterkind of cash feeders. “The biggest majority of these cattle have already moved for the late summer/early fall timeframe so trying to find a test of the market is hard.”
As mentioned, near term feeder futures were up compared to their prior week close. At $144.58 by midday Thursday, October feeders gained 78 cents, and November’s $145.63 represented a $1.28 gain. Vetterkind foresees support for the November contract at $145-146 going forward. — WLJ