Although cattle futures found some footing this week, cash prices for all classes of cattle continued lower.
Steers and heifers traded $4-$7 per cwt lower at auction, with instances of as much as $15 lower, according to the Agricultural Marketing Service (AMS). Heifers earmarked as replacement quality hovered in the $135-$150 per cwt range.
The steepest declines were for un-weaned and fleshy calves coming to town straight off mama.
“Feeder cattle prices are under extreme pressure after last week's fed cattle trade hit a new low for 2016,” said the AMS reporter on hand for Monday’s sale at Joplin Regional Stockyards in Missouri, where steers and heifers traded $10-$15 lower.
Similarly, the AMS reporter on hand for Wednesday’s sale at Hub City Livestock Auction in Aberdeen, S.D., reported moderate demand at best for the handful of weaned and un-weaned spring calves on offer.
“It is increasingly difficult to find any positive aspects of a market whose bottom has totally disappeared,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Calf and feeder cattle prices appear to be falling into the abyss and there is no sign of a slow-down in the price decline for any of these animals.”
One note of optimism came from Derrell Peel this week. The Extension livestock marketing specialist at Oklahoma State University expects stocker cattle prices to strengthen some in the coming weeks as wheat pasture demand develops, perhaps a bit ahead of the bulk of the fall run of calves in late October and November.
Peel adds, “Cheap feed encourages cattle feeding, and as long as feedlots have incentives to market cattle aggressively, carcass weight increases beyond normal seasonal levels are not expected.”
Also positive are continued gains on the export front.
U.S. beef export volume in August was the heftiest in two years—including record-large monthly volume to South Korea and Taiwan—according to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF).
Compared with the previous year, August beef export volume climbed 27%. For January through August, export volume was up 6% to 747,706 metric tons, while value was down 7% to just over $4 billion. Export value per head of fed slaughter was $256.73 in August, down 4% from a year ago. Value for January through August was $252.50, down 12%.
“Currently U.S. beef and pork are very competitive, as the production of our key competitors – Australia and the European Union – has moderated and prices have jumped,” says Philip Seng, USMEF president and CEO. “As U.S. competitiveness continues to improve, we remain optimistic that exports will maintain positive momentum through the end of this year and into 2017.”
Fed cattle, wholesale values falter
In the meantime, wholesale beef values failed to gain any seasonal momentum this week. Choice boxed beef cutout value was $4.28 lower week to week at $183.07 per cwt Friday afternoon. Select was $3.36 lower at $174.51.
Cash fed cattle prices continued lower with the softer wholesale values, as packers appear to maintain extra leverage from forward contracted cattle. Cash fed cattle prices were $1-$3 lower at $99 to mostly $102. Dressed sales were $1-$5 lower at $159-$160.
“There were several fed cattle that traded under the $100 mark this week, and it would not be surprising to see the weighted average price dip below that level next week,” Griffith says. “The seasonal trend is for the market to find some support, but this is also the time of year when cattle feeders gain some leverage on packers, which has yet to happen.”
“Large weekly cattle slaughter (around 600,000 head) for the past four months has been raging on as packer margins continue to run well into positive territory and cattle feeders cannot seem to gain the upper hand even with the increased harvest,” AMS analysts say.
“Larger Saturday harvests will continue to occur as long as handsome margins hold. Packers won't need to get too aggressive until they work through the stockpile they have committed to them through their formulas and forward contracts.”
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