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.

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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.”

Maples points to the previous week for illustration. The Five Area direct weekly weighted average cash price for all grades of live steers was $101.73 per cwt. October Live Cattle futures (the spot month) averaged $97.76. So, the average basis was a positive $3.97.

Thus far, carcass weights continue to suggest feedlot currentness.

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.

With that said, Andrew P. Griffith, agricultural economist at the University of Tennessee notes that deferred Live Cattle futures contracts are trading at a premium to the spot month. In his weekly market comments, Griffith explains that provides incentive to feed cattle longer.

On the other side of the business, wholesale beef values continue to adjust to fundamental levels prior to the Tyson plant fire. Choice boxed beef cutout value was $6.43 lower week to week on Friday at $220.88 per cwt. Select was $3.34 lower at $198.60. 

“Prices are closing in on $20 lower than their weekly peak but remain $5 higher than where they were prior to the fire,” Griffith says. “It is likely boxed beef prices will continue to moderate as fall approaches since the market is typically soft compared to the summer…The beef market may finally see some support from the African Swine Fever issue as the Chinese government is looking for pork to purchase.”