Weekly update: Nov. 20, 2009

The live-cattle trade Friday morning was quiet. USDA’s mandatory price reporting (MPR) service reported that Nebraska sold 1,175 head at $136.44 dressed for a weekly total of 60,514 head. Iowa-southern Minnesota sold 798 head, with some of these at $130.18, for a weekly total of 38,990 head. Kansas sold 120 head for a weekly total of 29,166 head. Texas sold no cattle for a weekly total of 16,065 head. The MPR weekly totals include negotiated cash and grid sales.

Live-cattle futures closed slightly higher. December closed up 27 points at $83.95 ($83.32 last Friday), February closed up 5 points at $85.42, April closed up 17 points at $88.05, June closed up 30 points at $85.17 and August closed up 20 points at $85.50.

The week’s cattle slaughter was an estimated 631,000 head (636,000 head the same week last year), with Friday’s kill 120,000 head and Saturday’s 20,000 head. Year-to-date FI slaughter is an estimated 29.382M head, 4.0% lower than 2008’s 30.600M head. Hog slaughter year to date is 2.8% lower than last year.

The week’s cattle slaughter was an estimated 631,000 head (636,000 head the same week last year), with Friday’s kill 120,000 head and Saturday’s 20,000 head. Year-to-date FI slaughter is an estimated 29.382M head, 4.0% lower than 2008’s 30.600M head. Hog slaughter year to date is 2.8% lower than last year.Packer margins for the week were negative by 10¢/head, compared to a negative $20.88 the week before, according toHedgersEdge.com.

Projected Cattle Feeding Margin

The projected cattle-feeding margin for this week (cattle placed on Nov. 20, with an expected finish date of April 30, 2010, is a positive $30.39/head, according to the North American Institute for Beef Economic Research (NAIBER). That compared with a positive $10.65/head the week before. The lower and upper profit potential is a negative $145/head to a positive $204/head, vs. a negative $170 to a positive $190 the week before.

The weekly margin includes: a 750-lb. steer; its average price at Monday’s Oklahoma City Stockyards sale; a Kansas feedlot location; interest rates that reflect general cattle financing terms; seasonally adjusted expected average daily gains, death loss and other feedlot inputs; projected corn costs during the projected feeding period, using Thursday’s corn futures closes; a projected live-cattle price at the end of the feeding period, using Thursday’s live cattle futures closes; a projected outweight of 1,250 lbs.

NAIBER’s risk analyzer calculates the risk associated with feeding cattle based on these and other inputs. As noted, some inputs will be updated each week while others, such as daily gain and death loss, will be adjusted on a seasonal basis. People wishing to calculate their own projected cattle feeding returns, using their own inputs, can do so by going to NAIBER’s Cattle Feeding Return Risk Analyzer at www.naiber.org/cattleriskanalyzer/

NAIBER also posts historical data and two graphs of its weekly calculations that it started in January this year. These can be found under the “expected Kansas feeding return” icon. Also available there is a link to a spreadsheet that contains some of the details of the calculated inputs.

Cattle On Feed Report

USDA released its monthly Cattle on Feed (COF) report Friday afternoon. The numbers for the U.S. were:

COF 1 November 1: 11.134M head, 101.5% of year ago
Placed in October: 2.474M head, 101.5%
Marketed in October: 1.755M head, 96.7%

Analysts regarded the report as neutral. October marketings were 1% or more below most forecasts but the month had one less slaughter day than in October 2008. October placements were slightly lower than forecast but were above year-earlier levels for the fourth month in a row. Feedlots placed slightly more lighter than heavier weight cattle, although the lightest category (under 600 lbs.) saw the biggest year-on-year decline (85,000 head).

The under 700 lbs. category saw 1.260M head placed, down 55,000 head or 4.2% from last year. The 700 lbs. and over category saw 1.214M head placed, up 91,000 or 8.1%.

The smaller than expected marketings and placements meant the Nov. 1 COF total was close to expectations. Of the COF totals in the major feeding states, Texas was up 1%, Kansas and Nebraska were up 4%, Colorado was up 8% and Iowa was up 11%. Other states with larger totals than year ago were Oklahoma and South Dakota. Iowa again had the largest percentage increase in placements – up 18% on last year.

Texas and Kansas marketings were each down 4%. This reflected the smaller numbers on feed in Southern Plains yards but also that feedlots might need to increase their marketings the rest of November, say analysts.

Have a good week.
Steve Kay