Despite ongoing positive fundamentals that include higher wholesale beef values, higher calf and feeder cattle prices, year over year and evidence of regionally snug front-end fed cattle supplies—market tones grew increasingly iffy as the week progressed.
Steer and heifer calves sold steady to $5 per cwt higher, according to the Agricultural Marketing Service. Feeder steers and heifers sold steady to $5 lower.
According to AMS analysts, “Buyers were more reserved on feeders headed straight to the feedyard, given the week’s volatility in the futures market. However, they add that demand was good to very good on calves suitable for grazing.
Feeder Cattle futures closed an average of $2.51 lower across the front half of the board, week to week on Friday and then an average of 93¢ lower.
Andrew P. Griffith, agricultural economist at the University of Tennessee, cautions in his weekly market comments that challenging prices may be looming for cow-calf producers. So far this year, he explains strong fed cattle prices and Feeder Cattle futures helped fuel higher cash prices for calves and feeder cattle.
“The weakness that was present in the market this week could be a factor of both reduced finished cattle prices and reduced pen space at some feedlots,” Griffith says. He explains, If these two factors are the driving force behind the price decline for feeder cattle, then the decline might be short lived and prices should be supported moving into the late spring and early summer. However, he says, if the price decline is due to a larger underlying issue, such as increased beef production and static beef demand, then softer prices may persist.”
Currently, the reduced pen space Griffith alludes, and the larger than expected feedlot placements in recent months, have as much to do with drought-decimated wheat pastures shoving cattle into feedlots earlier than normal as it does increasing cattle supplies.
Listen to Wes Ishmael's Cattle Market Weekly Audio Report every Saturday morning on the BEEF magazine website. This is your report for Saturday, Mar. 3, 2018.