Cattle Economics

Positive Auction Trade Gives Way to Bearish Friday

RSS

According to the Agricultural Marketing Service (AMS) Friday, feeders traded steady to $3 higher, with the full advance in the Southern Plains and Mountain States, while some weakness was noted in the Northern Plains where prices have been the loftiest.

Stocker cattle and calves, as well as feeder-weight cattle, continued pushing the market higher last week.

According to the Agricultural Marketing Service (AMS) Friday, feeders traded steady to $3 higher, with the full advance in the Southern Plains and Mountain States, while some weakness was noted in the Northern Plains where prices have been the loftiest.

“Stocker cattle and calves traded $3-$7 higher with orders pouring into the Southeastern calf markets as we creep ever so closer to grass time from this unprecedented mild winter,” AMS analysts explained. “Stocker buyers don’t seem to be feeling the high market pressure as new orders for calves roll in each week. Inexpensive weight gains on early spring forage offer the ability for grass interests to cheapen these cattle back into a reasonable profit margin.  

“Thin-fleshed stockers with enough age to take full advantage of early-season grass can easily yield gains from 50¢-60¢/lb., which is more than $1/lb. cheaper than that pound is worth. Hence, it won’t take long for a 5-weight steer costing near $200/cwt. to reclaim the $158/cwt. that is presently being advertised by the summer CME Feeder Board.”

In terms of the fed cattle and beef trade, packers finally reduced kills and tightened production enough to induce higher wholesale prices.

In Monday’s CME Group Daily Livestock Report, Len Steiner and Steve Meyer explained, “The gains in wholesale beef prices have been broad-based as packers have sharply reduced kills in recent days. Steer and heifer slaughter (feedlot cattle) is currently running at a weekly pace of about 468,000, about 7% below year-ago levels. Packers have been working reduced hours on Fridays and Saturdays for the last three weeks and the result is showing up in the boxed-beef market as retailers and foodservice operators looking for spot loads are now forced to pay higher money.”

By the end of the week, Choice boxed-beef values had climbed $3.53/cwt. compared to a week earlier, to $186.65/cwt. Select boxed-beef cutout values were up $3.80/cwt. on the week to $181.88/cwt.

Higher wholesale beef values helped set the stage for cash fed cattle trade on either side of steady. Compared to the prior week, through Friday afternoon, fed cattle were selling $1 higher in Texas at $124 and steady in Kansas at $123. Live sales in Colorado were trading 50¢ lower at $123.00-$123.50. Live sales in Nebraska were also trading 50¢ lower at $123.00-$123.50. Dressed sales in Nebraska were trading $1 lower at $197.00-$198.00, a few up to $198.50. There were too few sales in the western Corn Belt for a trend; dressed sales there were at $196-$198 the previous week and live sales were at $123-$124.

However, the positive tone early in the week grew more bearish Friday with negative outside markets, as well as apparent worries by commodity traders about how high prices can go before consumers start walking away. That kind of chatter helped pressured live-cattle futures an average of $1.12 lower across most of the board Friday to lowest levels since about mid-January. Feeder futures were down an average of $1.41 across most of the board Friday.Stocker cattle and calves, as well as feeder-weight cattle, continued pushing the market higher last week.

According to the Agricultural Marketing Service (AMS) Friday, feeders traded steady to $3 higher, with the full advance in the Southern Plains and Mountain States, while some weakness was noted in the Northern Plains where prices have been the loftiest.

“Stocker cattle and calves traded $3-$7 higher with orders pouring into the Southeastern calf markets as we creep ever so closer to grass time from this unprecedented mild winter,” AMS analysts explained. “Stocker buyers don’t seem to be feeling the high market pressure as new orders for calves roll in each week. Inexpensive weight gains on early spring forage offer the ability for grass interests to cheapen these cattle back into a reasonable profit margin.  

“Thin-fleshed stockers with enough age to take full advantage of early-season grass can easily yield gains from 50¢-60¢/lb., which is more than $1/lb. cheaper than that pound is worth. Hence, it won’t take long for a 5-weight steer costing near $200/cwt. to reclaim the $158/cwt. that is presently being advertised by the summer CME Feeder Board.”

In terms of the fed cattle and beef trade, packers finally reduced kills and tightened production enough to induce higher wholesale prices.

In Monday’s CME Group Daily Livestock Report, Len Steiner and Steve Meyer explained, “The gains in wholesale beef prices have been broad-based as packers have sharply reduced kills in recent days. Steer and heifer slaughter (feedlot cattle) is currently running at a weekly pace of about 468,000, about 7% below year-ago levels. Packers have been working reduced hours on Fridays and Saturdays for the last three weeks and the result is showing up in the boxed-beef market as retailers and foodservice operators looking for spot loads are now forced to pay higher money.”

By the end of the week, Choice boxed-beef values had climbed $3.53/cwt. compared to a week earlier, to $186.65/cwt. Select boxed-beef cutout values were up $3.80/cwt. on the week to $181.88/cwt.

Higher wholesale beef values helped set the stage for cash fed cattle trade on either side of steady. Compared to the prior week, through Friday afternoon, fed cattle were selling $1 higher in Texas at $124 and steady in Kansas at $123. Live sales in Colorado were trading 50¢ lower at $123.00-$123.50. Live sales in Nebraska were also trading 50¢ lower at $123.00-$123.50. Dressed sales in Nebraska were trading $1 lower at $197.00-$198.00, a few up to $198.50. There were too few sales in the western Corn Belt for a trend; dressed sales there were at $196-$198 the previous week and live sales were at $123-$124.

However, the positive tone early in the week grew more bearish Friday with negative outside markets, as well as apparent worries by commodity traders about how high prices can go before consumers start walking away. That kind of chatter helped pressured live-cattle futures an average of $1.12 lower across most of the board Friday to lowest levels since about mid-January. Feeder futures were down an average of $1.41 across most of the board Friday.

Discuss this Blog Entry 0

Post new comment
or to use your BEEF Magazine ID
What's Cattle Economics?

Wes Ishmael provides tightly focused analysis and commentary on specific beef quality and marketing issues of practical importance to beef producers.

Contributors

Wes Ishmael

Among the industry’s most insightful thinkers, Wes Ishmael concentrates on industry price and market perspectives for BEEF magazine. Along with his monthly “Cattle Economics” column...

Sponsored Introduction Continue on to (or wait seconds) ×