Early Winter Blast Helps Lift Cattle Markets

Early Winter Blast Helps Lift Cattle Markets

Cash fed cattle prices reached new records this week ($168-$172/cwt.), boosted by slower marketing from feedlots and the winter blast that could dampen gain.

Cash fed cattle prices climbed to a new record on Friday, gaining $2-$6/cwt. compared to the previous week and bringing $168-$172/cwt. on a live basis. Dressed sales were $2-$4 higher at $264-$266/cwt.

Packers purchased a smaller volume of cattle last week, trying to ratchet wholesale prices higher and boost margins. Then came the cold snap this week.

“Live Cattle (futures) advanced Monday, lifted by a foot of snow through central Minnesota into Wisconsin and much colder weather forecast for much of the Farm Belt into Texas and east through Pennsylvania,” John Otte, Penton market analyst, explained on Tuesday. “Bad weather may well slow movement of livestock from farms to feeding and processing facilities. Extended cold, wet weather can also up feed consumption and trim rates of feedlot gains, which would water down the potential profit hike from higher prices.”

Week-to-week, Live Cattle futures closed an average of $2.70 higher across the board.

Week-to-week, Choice boxed beef cutout value was $3.05/cwt. higher at $252.16/cwt. Friday afternoon. Select was 22¢ higher at $238.29.
 

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“Cattle feeders continue to pull rabbits out of the hat as they find ways to push live cattle prices higher,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly Livestock Comments. “As soon as one might think prices will break and soften, or at a minimum, be steady with a week ago, feedlot managers are able to squeeze a couple more dollars out of packers. This has resulted in steady to stronger margins for the feedlot industry, but has pressured the packing industry into red ink.”

The most recent Focus On Feedlots survey from Kansas State University (KSU) estimates steers and heifers marketed in September sold at profits of $321.03/head and $252.20/head, respectively.

“This marks the ninth consecutive month with estimated profits exceeding $125/steer which is the only such sequence on record,” says Glynn Tonsor, KSU agricultural economist. “The $321/steer return is also the largest net return (on a $/head basis) in this series going back to 1993.”

Lower feed costs, more days on feed, increased carcass weights and the higher price have all helped feedlot remain in the black
 

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In reviewing the Focus on Feedlots data, analysts with the Livestock Marketing Information Center (LMIC) explained this week, “Since May, average days on feed for steers have tracked about 6 to 10 days longer than the five-year average from 2008-2012. Since July, the number of days animals have been on feed has increased counter-seasonally. Usually, days on feed peak in April and then decrease until November. This year, days on feed followed the seasonal trend until July but have been increasing since then, with September recording a 20-day increase in average days on feed compared to historical records. Heifers in feedlots have followed the same general trend.”

From January through the third quarter of this year, LMIC analysts say that cost of gain has generally been trending lower.

“In September, the reported cost of gain for steers was $91.49/cwt. and $97.89/cwt. for heifers,” LMIC analysts explain. “These costs are converging with the five-year average levels and are currently around $20-30/cwt. below last year’s. Decreased costs can mostly be attributed to lower corn prices.”
 

 

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