“The calf market came through the heavy auction offering—and the October-November deliveries of prior video and direct sales—relatively unscathed as country deliveries are mostly complete,” said analysts with the Agricultural Marketing Service (AMS) on Friday.
Underscoring the point, calves traded steady to $5/cwt. higher this week throughout the Southern Plains and Northern Plains. There were instances of $8-$10 higher. Remaining yearling feeder cattle on offer traded fully steady to $3 higher.
Feeder Cattle futures were 15¢ lower to 22¢ higher across most of the board; 55¢ and 95¢ higher toward the back.
“Lighter auction runs are upon the market with the onset of holiday schedules and there seems to be plenty of demand to push feeder and stocker cattle prices even higher,” AMS analysts say. “Demand remains very good on all weights of calves and true yearlings. Harvest is winding down across the Corn Belt and the cheapest corn prices in four years is causing many Midwestern and Northern Plains farmer-feeders to consider walking a portion of their crop to town.”
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Record-high fed cattle prices continue to help cattle feeders find extra jingle on the buying side of the transaction.
Although there was only scant cash fed cattle trade through Friday afternoon, prices indicate cattle feeders are securely positioned to maintain fed cattle prices in record territory.
Though too few to trend, a light test traded in the Texas Panhandle at $172/cwt. through Friday afternoon, compared to the previous week’s light test there at $168-$170.
Likewise, some reports Friday pegged a few sales in Nebraska at $172, compared to $170-$172 the previous week, but again, too few to trend.
Overall, cash fed cattle prices last week were $168-$172 on a live basis and $264-$266 dressed.
Week-to-Week, Live Cattle futures closed an average of $1.51 higher.
Although packers continue struggling to demand higher prices from retailers, wholesale beef values gained some ground. Week-to-week, Choice boxed beef cutout value was $3.06/cwt. higher, ending the week at $255.22/cwt. Select was $3.64 higher at $241.93.
“While wholesale beef cutouts tend to move sideways this time of year, demand for middle meats going into the holidays for prime rib meals is offsetting weakness in rounds and chucks to help lift cutouts,” says John Otte, Penton market analyst. “People are willing to pay the price for beef. The strength of domestic demand for beef surprises many who expect both retail grocers, restaurants and consumers to boost purchases of cheaper proteins like pork and chicken and cut back on beef.”
“Historically small fed cattle numbers (see ‘Feedlot Placements Down 1%’) will remain quite bullish with strong support, hopefully sparking additional follow-through buying,” AMS analysts say.
So far, excess feedlot capacity also continues offering price leverage to calf and feeder cattle sellers.
“In 2003, the percentage of feedlot capacity in the Corn Belt containing cattle began escalating,” Otte notes. “One driver was rising availability of ethanol co-products. In 2012, feedlot capacity utilization slid in all regions as droughts slashed herds and sky-high feed prices made cattle feeding a dismal profit proposition. Current utilization rates between 70% and 83%, depending on the region, say the U.S. still has a lot of excess bunk capacity in feedlots.”
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