Calf and feeder prices continued the steep climb higher last week, with few signs of slowing much at auction.
“Feeder and stocker cattle markets continue to show strength through October, which is annually the month with the most pressure from spring-born calf sales and shipments of previously contracted cattle,” analysts with the Agricultural Marketing Service (AMS) explained Friday.
Weighted regional feeder cattle prices were $2-$5 higher than when last reported Sept. 27. Price trends for calves were even steamier in parts of the country, although AMS analysts point out 6-weights are under the typical seasonal price pressure that comes with supply outpacing demand.
Feeder Cattle futures closed an average of $2.32 lower across most of the board based on a late-week reversal tied to profit taking and sentiment that September placements will be higher than the previous year when the October Cattle on Feed report comes out Oct. 31.
Finally back to work, USDA cancelled the World Agriculture Supply and Demand Estimates that was scheduled for release Oct. 11. Crop Progress reports for Oct. 7 and Oct. 15 were also cancelled.
“There is an expectation that feeder cattle prices will continue to ride high the next year or so due to the limited supply of feeder cattle and the relatively cheap feed costs associated with high corn yields,” says Andrew P. Griffith, University of Tennessee agricultural economist, in his weekly market comments. “The one aspect of the market that could keep feeder cattle prices in check is fed cattle prices. For feedlots to be able to justify paying record prices for feeder cattle they will have to receive record prices for fed cattle and that may depend on beef movement domestically and internationally. Feedlots are trying to fill the pens, while packers are trying to maintain throughput capacity, which means what they are willing to pay is related to covering all variable costs and as much of their fixed costs as possible. Currently, these factors bode well for cow-calf producers and stocker producers.”
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At least for a week, cattle feeder got their wish with cash fed cattle gaining mostly $1-$2 at $129-$131/cwt. on a live basis and mostly $204 dressed.
Although cash fed cattle trade gained ground during the week, Live Cattle futures were down an average of mostly 50¢ lower after the spot month, on profit-taking after strong gains earlier in the week, as well as wonderments about the top being in for a time.
Beef prices continue higher, too. Compared to Sept. 27 – the last AMS boxed beef cutout report until this Thursday – Choice cutout is $3.04 higher ($196.29/cwt. Friday) and Select is $2.37 higher ($179.98 Friday). See “Fed Cattle And Beef Moves Higher” below.
“Both the Choice and Select cutouts have made gains since the last Friday of USDA-reported boxed beef cutout values. The market should continue to strengthen as we move into the holiday season and as retailers and consumers begin to make purchases for holiday gatherings,” Griffith says. “The Choice cutout has lofty expectations during the late-fall time period as it is expected to break back through the $200 level that it surpassed for the first time during the first week of May.
“It almost seems certain that Choice beef will trade above the $200 mark this fall, but the next question is if it can make a run at the record closing price of $211.37 set May 23 of this year. It will be difficult for the apex of the fall Choice cutout to rival the record-setting price experienced in May. However, beef will likely make a strong showing as it competes against pork and poultry products. If there is any additional discretionary spending made available for consumers due to declines in the prices of other goods, then beef will likely be the protein source purchased by most consumers,” Griffith says.
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