Few are overly confident that lows are in for Cattle futures, but the week’s rally and renewed trade optimism have many hoping Monday’s trough carved out a hard bottom.
Week to week on Friday, Feeder Cattle futures closed an average of $3.29 higher ($2.55 to $3.77 higher). That was with Corn futures closing an average of 12 cents higher through the front six contracts week to week.
Although the rally added some zest to some cash feeder prices later in the week, increased trade volume and lingering uncertainty continued to weigh heavy.
“Cattle feeders have been hammered by much lower cash fed cattle prices and now a futures complex that continues to plummet even further,” explained the AMS reporter on hand for Monday’s auction at Sioux Falls Regional in South Dakota—before the rally. “This negativity is making it very difficult to discern at what price level feeder cattle should be bought.”
Nationwide, steers and heifers sold mostly $2-$6 per cwt lower, with calves trading as much as $10 lower, according to the Agricultural Marketing Service (AMS).
Heavy Supply and Less Capacity Pressure Fed Cattle
Negotiated cash fed cattle prices continued to waver. The only trend reported by USDA through Friday afternoon was $1 lower at $99 per cwt in the Texas Panhandle.
Week to week through Thursday afternoon, on lighter trade, the Five Area direct average steer price was $2.82 lower at $99.49 per cwt on a live basis; $6.69 lower in the beef at $159.50.
Even so, Live Cattle futures erased the previous week’s losses, closing an average of $3.91 higher week to week on Friday ($3.45 to $4.70 higher). Besides oversold conditions, limit-up moves in Lean Hog futures provided fuel.
Despite lower fed cattle prices, it appears fed cattle basis should continue encouraging timely marketing.
“Strong basis can help pull cattle through the supply chain, even at low prices, because producers who hedged their cattle want to take advantage of the additional revenue that larger basis provides,” says Josh Maples, Extension livestock economist at Mississippi State University, in the latest issue of In the Cattle Markets. “That is likely the case in recent weeks even as fed prices have deteriorated.”
The average dressed steer weight for the week ending Aug. 31 was 4 pounds less than a year earlier at 884 pounds, according to USDA’s Actual Slaughter Under Federal Inspection report. At 811 pounds, the average dressed heifer weight was 7 pounds lighter.
Listen to Wes Ishmael's Cattle Market Weekly Audio Report every Saturday morning on the BEEF magazine website. This is your report for Saturday, September 14, 2019.