What is in this article?:
- Calf, Feeder Prices Battle Back
- Price Summary
Friday’s monthly Cattle on Feed report continued to support the notion that cattle supplies will tighten sooner rather than later, especially with the drought-forced early sales again this year.
Wholesale beef prices that had continued to meander downward for the better part of a month finally rallied last week, up $9.50 for Choice boxed-beef cutout values and $6.66 higher for Select. Judging by cattle futures last week, though, traders aren’t necessarily convinced the price low has been established.
“Current retail prices for beef and beef products have met with consumer resistance,” say analysts in last week’s monthly USDA Livestock, Dairy and Poultry Outlook. “While high in relative terms, retail prices are not providing margins down the chain that support the cattle feeding and packer sectors. With packers caught in an intense squeeze between the cost of fed cattle and wholesale cutout values, either cutout values will have to increase – pressuring retailer margins or resulting in higher retail beef prices, and counter to recent price movements – or fed cattle prices will have to remain relatively weak compared with the past quarter. Lower fed cattle prices will continue to squeeze cattle feeders’ profit margins.”
Cash fed cattle trade last week was steady to $2 lower in Texas at $120-$122. Live sales in Kansas traded fully steady at $122. Up north, dressed sales jumped $5 ($198-$200) while live sales traded at $123-$124, compared to the previous week’s $122-$125.
Calves and feeders regained some price footing last week, trading steady to $3 higher, according to the Agricultural Marketing Service (AMS).
“Feeder buyers pushed price levels to fill a few more vacant pens before marketing slows to a crawl as producers turn their attention to corn and soybean planting in the Midwest, wheat harvest in the Southern Plains, and hay production across the southern tier of the United States,” AMS analysts explained Friday.
Some may be cautious to term it a market rally, butcalf and feeder prices took another solid step ahead last week.
According to the Agricultural Marketing Service (AMS), yearling feeder cattle sold firm to $5 higher. Early arrivals of new-crop calves traded fully $3-$6 higher; instances of as much as $10 higher. Steers led while heifers shuffled along at the bottom end of the price advance.
“Despite very little (if any) relief from the extreme drought that has overtaken the bulk of our nation, including all of the major cattle feeding regions, buyers flexed their muscle in pursuing all classes of feeder cattle in the face of historically high feed prices,” AMS analysts say.
The uptick in wholesale beef values and cash fed cattle prices certainly helped. Between Aug. 10 and 17, Choice boxed-beef cutout values advanced $8.10/cwt.; Select was up $7.18. Cash fed cattle sales last week increased $1 at mostly $121/cwt., building upon the prior week’s $3-$5 gain.
Moreover, Friday’s monthly Cattle on Feed report continued to support the notion that cattle supplies will tighten sooner rather than later, especially with the drought-forced early sales again this year. Total cattle on feed Aug. 1 (10.7 million head) was 1% higher than a year earlier. July placements (1.92 million head) were 10% less than the prior year. July marketings (1.91 million head) were a touch lower than in 2011. Those estimates are near the average predictions heading into the report.
“After two straight years of exceptional drought, encompassing most of the major cattle-producing states and the subsequent herd sell-off, backgrounders are banking that cattle of any class will be good property to own in the next calendar year,” AMS analysts say. “CME feeder cattle contracts are currently priced progressively higher through May of 2013. The challenge lies in keeping these cattle fed through the fall and early winter when many market members expect certain weights of feeder prices to eclipse all-time record levels reached in May of 2012.”