Increasing demand for grass-suited cattle pushed calf prices higher this week, while early-week price uncertainty for fed cattle and slumping summer futures contracts held feeder prices in check.
Steer and heifer calves sold steady to $5 per cwt higher, according to the Agricultural Marketing Service (AMS). Feeder steers and heifers traded mostly steady to $5 lower, with instances of $1-$2 higher at 600-700 pounds.
In the Southeast, calves sold steady to $3 higher, while feeder cattle traded steady to $3 lower.
"Demand remains very good for lightweight calves, and moderate to good for feeders," AMS analysts say. "The spring-like weather is creating a lot of interest for grass calves, with buyers continuing to be very aggressive for longtime-weaned calves suitable for summer grazing programs as their availability is declining."
Cash fed cattle trade was slow to develop, but when it did, prices were a pleasant surprise to some. Live prices were generally steady to $1 lower in the south at $119-$120 per cwt and steady to $1 higher in the north (as much as $2 higher in the western Corn Belt) at $119-$120. Dressed trade was steady at $190.
A late-week surge pushed Choice wholesale boxed beef cutout value $2.86 per cwt higher week to week on Friday at $190.49. Select was $3.59 higher at $189.24. At $1.25, the Choice-Select spread continued in a narrow range; 58¢ to $2.94 so far this month.
Cattle feeders see some light
Although cattle feeders remain understandably cautious when re-filling pens, there are growing indications that the economic fog is lifting.
"Cattle sold by feedlots during January were in the black for the first time in several months," say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. "In January, fed steer prices were the highest for any month since June 2016. January's closeout profit was the largest for any month since the summer of 2014. Estimated closeouts by LMIC showed that for the last seven months of 2016, every month had red ink. In fact, only two months since January 2015 were profitable when all economic costs were considered. Even though returns have improved, due to huge financial losses in recent years, cattle feeders will likely remain rather cautious when bidding for feeder cattle."
Keep in mind that projections like those mentioned here cannot account for price risk management, which can significantly alter estimated returns.
Assuming a feeder steer at 700-800 pounds, LMIC estimated the breakeven sale price in January at $112-$114 per cwt.
"Breakeven sales prices for the next several months will remain low, ranging from about $108 to $112 per cwt. throughout the spring months. That is the lowest since early 2011," LMIC analysts say.
Likewise, the most recent Focus on Feedlots survey from Kansas State University (KSU), estimates improving cattle feeding returns.
KSU projections for the first quarter are for steers to sell for a positive $10.84 per head in January, a positive $55.25 in February and a positive $128.09 in March. Net returns for April-September are -$39.58 to +$27.28.
Projections for the first quarter are for heifers to sell for a positive $50.49 per head in January, a positive $110.32 in February and a positive $164.14 in March. Net returns for April-September are -$22.33 to +$61.54.
The February World Agricultural Supply and Demand Estimates (WASDE) pegged the fed steer price for this year $3 per cwt higher than the previous month on both ends of the range at $109-$116. In the first quarter this year, fed steer prices are projected by WASDE at $115-$119; in the second quarter $110-$116; in the third quarter $106-$114; in the fourth quarter $104-$112.
"Despite expected improvements in cattle feeding returns, feeder cattle supplies outside feedlots are above last year and prices will remain under pressure through much of 2017," say analysts with USDA's Economic Research Service, in the February Livestock, Dairy and Poultry Outlook. "Feeder cattle prices for 2017 are forecast to average $131-139 per cwt, down about $7 from 2016."