Calf and feeder prices continued to rebound this week amid plenty of uncertainty.
Calves weighing less than 500 pounds sold $5-$15 per cwt higher, according to the Agricultural Marketing Service. Calves heavier than 500 pounds and yearlings sold steady to $5 higher with instances of $10 higher.
At $192.80, the CME Feeder Cattle Index was $4.79 higher week to week. That’s $8.51 more than two weeks earlier.
Feeder Cattle futures were an average of $2.31 higher week to week ($1.25 to $3.12 higher).
Live Cattle futures were an average of $3.08 higher week to week across a broad range ($1.50 to $5.01 higher).
Despite the encouraging view, the ride felt akin to a long day on a straight-shouldered horse, and felt less than settled at the end of the week.
Wariness was most apparent in the cash fed cattle market. Trade remained at mostly a standstill through Friday afternoon with a sizable gap between prices cattle feeders wanted and those being offered by packers.
“Cattle feeders are clinging to the upswing in fed cattle futures with higher asking prices,” explained Andrew P. Griffith, agricultural economist at the University of Tennessee, in his market comments. “Alternatively, packers are hesitant to jump on higher prices due to another potential collapse in boxed beef prices, which would send packer margins deep into the red. There is no doubt that fed cattle prices still have some upside this fall, but the uncertainty rests on how high prices can go and how far they will drop once they reach their fall apex.”
Wholesale beef values continued to advance week to week. Choice boxed beef cutout value was $5.48 higher at $217.17 per cwt. Select was $4.54 higher at $210.90.
But, Griffith says there’s an artificial feel to wholesale values, due in part to extraordinarily large supplies of frozen beef, pork and chicken (see “Carcass weights and frozen supplies spike higher” below).
The continued disproportionate placement of heavyweight feeder cattle—the threat of extending or recreating the fuel that drove the recent price wreck—weighs on market confidence, too (see “Heavyweight feedlot placements increase again” below).”
“This week’s increase in prices seems to indicate that prices (calf) will find it difficult to strengthen further,” Griffith says. “There could be some slight price increases from current price levels, but the upside will be limited as fundamentals will weigh against the calf market.”
Likewise, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, says in his weekly market comments, “While calf prices will likely continue to bounce back from the recent crash, the amount of calf and feeder price recovery into November is the subject of speculation.”
For one thing, price levels hinge on how many new-crop calves come to town, Peel says, keeping in mind that more calves were born this year than last.
“It will depend, as well, on the number of summer yearlings yet to be marketed this fall,” Peel explains. “There is considerable variation among analysts about the yearling supply. Some feel that good summer conditions delayed marketings of yearlings this fall…Others believe that the number of steers in feedlots all year means that the number of remaining steers is limited and that much of the grass has been occupied by replacement heifers. At this point, I don’t see any strong indication of a significant backlog of delayed summer yearlings that will unduly pressure feeder markets.”
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