The break in corn prices lifted cash and futures cattle prices for most of the week. At the end, concerns about beef demand took cattle futures lower.
Calf and feeder cattle buyers lost no time taking advantage of the recent break in corn prices.
Feeder and stocker cattle traded $3-$10/cwt. higher at auction last week. Flyweights crossing the scale at less than 450 lbs. sold as much as $15/cwt. higher. The CME Feeder Cattle Index jumped $4.15 week-to-week.
It helped that recent moisture is being followed by grass-popping temperatures across wide swaths of grazing country.
“Drastic improvements in the weather did its part in adding demand to the feeder market, especially on stocker cattle that are in suitable condition for immediate turn-out and compensatory gain on greening pastures,” analysts with the Agricultural Marketing Service (AMS) said Friday. “…grass fever is in full swing following the warm-up and the confidence-boosting market signals from late last week with most major sale barns noticing new buyer numbers as local backgrounders entered the mix.”
“This may mark the beginning of the turnaround in cattle markets this spring as the majority of losses the past couple of weeks were recaptured this week,” said Andrew P. Griffith, University of Tennessee agricultural economist, in his Livestock Comments that are part of the weekly Tennessee Market Highlights.
That was before Friday underscored the current market fragility.
What began as a slow bleed in cattle futures from limit-up moves the previous Thursday, became a gusher fueled by concerns over sluggish employment figures and the potential impact on near-term beef demand.
Feeder Cattle futures dropped an average of $2.29 across the board Thursday and especially Friday. Feeder Cattle futures were down an average of $1.30 from the previous Thursday to Friday.
Cash fed cattle prices traded steady on a live basis ($128-$129/cwt.). Choice boxed beef cutout values were $2.27/cwt. higher week-to-week; Select was $1.37/cwt. lower week-to-week.
But, old-crop corn futures that were down an average of 62¢ week-to-week fueled speculation that cattle feeders will add more days and pounds to cattle.
Live Cattle futures dropped an average of $1.51 in the last two trading days. They were $2.26 lower from the Thursday before Good Friday to this past Friday.
Feedlot profit potential continues battling against a sea of red ink.
Based on February close-outs in the most recent Kansas Focus on Feedlots survey, steers were estimated to have lost $174.02/head and heifers $151.61/head. That’s according to Glynn Tonsor and Kevin Dhuyvetter, Kansas State University agricultural economists. They say net returns projected for March close-outs are a negative $108.46/head for steers and a negative $98.20/head for heifers.
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Of course, drought remains the wild card for major cattle areas.
AMS analysts noted Friday, “Much of the Southern Plains received more beneficial moisture this past week, but many major grazing areas (including the Flint Hills of Kansas) are still reeling from drought and will need significant runoff for drinking water before cattle can be turned out.”
“Calf prices are likely to see a little more improvement the next couple of weeks, but it is not likely to be sustained at that high of a level as stocker producers fill up pastures,” says Tennessee's Griffith. “Tremendous jumps in feeder cattle prices are not likely to occur for another month or two, but should be reaching their annual high in July and August. Cull-cow prices continue to struggle as the pressure from dairy-cow slaughter continues."
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