Between calves dominating the seasonal mix, the holiday week ahead, and beef demand pressures, calf and feeder cattle prices faded some this week.
Although lighter-weight calves traded unevenly steady to $5 higher, calves weighing more than 600 lbs. sold steady to $3 lower, according to the Agricultural Marketing Service (AMS).
“CME cattle futures opened the week significantly lower, which pressured cash feeder cattle, perhaps hinting that prices are now descending the backside of the mountain top,” AMS analysts say. “However, lower price levels on feedlot replacement cattle are inevitable this time of year as a larger percentage of these cattle are merely big calves while true yearling supplies have been exhausted.”
The CME Feeder Cattle Index was about even week-to-week, while Feeder cattle futures declined an average of $1.32 after the expiring November contract.
There was no help from the fed cattle and beef markets.
Cash fed cattle prices that struggled for steady money the previous week sold $1 lower at $131/cwt. on a live basis and at $207/cwt. in the beef. Choice boxed beef cutout value was $2.24 lower week-to-week ($198.92/cwt.). Select was $1.62 lower ($186.82).
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Live Cattle futures declined an average of $1.80 week-to-week.
“All the talk continues to surround the reduced supply of fed cattle and its impact on beef, but at some point the effect of demand factors has to be discussed,” Andrew P. Griffith, University of Tennessee agricultural economist, explains in his weekly comments. “Consumers’ interest in beef appears to have waned, which provides little to no leverage opportunity for anyone in the cattle business.
“Beef prices generally receive a spark from holiday purchases after Thanksgiving. However, it may be a short-lived spark or it may not happen at all (this year) due to the short time period between Thanksgiving and Christmas. Soon after Thanksgiving, consumers will turn their attention to hams that will be lining the meat counter. If hams are taking up more space on the counter, then beef features will be sluggish at best. There are still consumers who prefer to eat beef during the holidays, but lower-priced meat alternatives will be difficult to overlook by consumers who are strapped for cash…”
Heading into this week, markets may also find some pressure from Friday’s Cattle on Feed report (see below). Placements in October were a bit higher and marketings were a bit less than analysts were expecting on average.
“Nonetheless, the new (old school) corn price is quickly pouring equity back into cattle feeders’ pockets and bolstering interest in all classes of feeder and stocker cattle with cost-of-gains well below the expected fed market,” AMS analysts say. “Calf demand remains very good as tight inventories of all classes of beef cattle are now blatant and many areas have sizeable stockpiles of hay and winter pasture to hold calves. Backgrounders are also already worried about their ability to purchase grazing cattle next spring.”
Cattle on Feed Report Summary
- Cattle on feed Nov. 1: (10.6 million head) is 6% less than a year ago, par with the average estimate.
- Placements in October: (2.39 million head) are 10% more than a year earlier. Ahead of the report the average estimate was for an increase of 8.7%.
- Marketings in October: (1.86 million head) are 1% more than last year. Ahead of the report, the average estimate was for increased marketings of 1.4%.
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