Dwindling cattle numbers, improved forage conditions and anticipated declines in feed costs continued to buoy the cash markets for calves and feeders last week. Yearling feeders sold steady to $2 higher. Calves sold unevenly steady, as much as $3 lower in the Southeast.
Although some bloom has faded from the summer recovery in cash calf and feeder cattle prices, they held their own this past week.
Yearling feeder cattle trended steady to $2/cwt. higher, with the full advance in direct trade, according to the Agricultural Marketing Service (AMS) Friday. Steer and heifer calves sold unevenly steady during the holiday-shortened week with Southeastern markets trading steady to $3 lower.
“Yearling feeder cattle demand is noticeably better in the northern half of the country where silage cutters are chopping away at the least impressive immature corn fields, while farmers still believe their favorite fields will bring about handsome yields despite slightly lowered crop condition reports,” AMS analysts say. “Calf demand seems equally good throughout the nation with near-record price levels being reached by either comparison to heavier feeder values or the best fall forage outlook in several years.”
Although the CME Feeder Cattle Index was $1.04 higher week-to-week on Thursday at $156.36, Feeder Cattle futures closed an average of 63¢ lower week-to-week, pressured in part by a late-week bounce in Corn futures (up 13¢ week-to-week for new-crop contracts).
“The spreading drought in the Midwest has damaged some of the U.S. corn crop and that means there will be less corn available to U.S. ethanol producers than earlier thought,” analysts explained in the biweekly CME Group Ethanol Outlook Report last week. “…The U.S. Drought Monitor showed the drought in the Midwest expanded with 25% of Iowa in a moderate drought on Aug. 27, up from 7.9% a week earlier…”
There was little support from Live Cattle futures, which closed an average of $1.28 lower in the front two contracts week-to-week.
Cash fed cattle could muster only steady money ($123/cwt.) in the Southern Plains on late-week trade. Prices in Nebraska trended steady at mostly $195 on a carcass basis, while trade in Iowa-Minnesota dropped $1-$2 ($193-$195) in the beef, and 50¢ to $1 on a live basis at $122.00-$122.50.
Still, analysts with the Livestock Marketing Information Center (LMIC) said last week that calf and yearlings prices are forecast to remain above year-ago levels for the remainder of 2013. However, they added that the pace of price increases seen in recent weeks is likely to slow and prices might decline modestly.
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“For the Southern Plains (using averages reported by USDA-AMS), in late-May of last year weekly average 500-600 lb. steer calf prices started at $183.68/cwt. and plunged to $153.56 by late August. Over that same time period, 700-800 lb. steers went from $155.13/cwt. down to $140.30,” LMIC analysts say. “This year the situation reversed. Steer calves (500-600 lbs.) in late-August averaged $177.29/cwt., up $25.75/ cwt. since late May. Between mid-May and late August of this year 700-800 lb. steers gained $26.94/cwt. (the Southern Plains average was $159.23 in late-August).”
For the remainder of 2013, LMIC expects 500-600-lb. steer calves (basis Southern Plains) to average in the low $170’s/cwt. and 700-800-lb. yearling steers to average in the low to mid $150s.
“Looking ahead, if cattle feeding returns are aided by substantially lower feedstuff costs, calf and yearling prices are forecast to post annual increases throughout 2014,” LMIC analysts say. “More year-on-year increases could happen in 2015, with the normal drought caveat, and two additional requirements: 1) the U.S. economy steers clear of economic recession, and 2) foreign markets can absorb most of the expected dramatic increase in U.S. chicken and pork production.”
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