Cattle Market Notes: Fed Prices Slip, Corn Higher
11/21/2009 01:14PM
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Fed cattle prices continued to slip lower this week. Moderate trade commenced on Wednesday in most regions, and prices were generally steady to $1 lower according to USDA Agricultural Marketing Service reports. In Texas, live basis prices were $1 lower than last week at $84. Kansas prices were also off $1 at $83 on Wednesday. Live basis prices in other regions were close to steady with last week: $82 to $84 in Nebraska, $83.50 in Colorado, and $80 to $82 in Iowa/Minnesota. Dressed prices in Nebraska and Iowa/Minnesota were mostly $130 this week (with significant dressed-basis trades in Nebraska on Wednesday), steady to $2 lower compared to last week. With break-evens on fed cattle in the vicinity of $90 (live basis), the recent downturn in fed cattle prices is making for a very bad ending to what was already a bad year. Livestock Marketing Information Center projections suggest that annual feeding losses in 2009 will be the second worst in their records going back to the early-1970s. Incidentally, the worst year in their records was 2008. Last week, cattle slaughter was the lightest non-holiday slaughter since last summer (625,000 head). The pace of slaughter picked up some this week to 631,000 head; still off from last year’s pace of 636,000 head. Dressed weights were down sharply for the second straight week: off 8 pounds from last week to an average dressed weight of 783 pounds. Hog slaughter is estimated at 2,322,000 this week compared with 2,290,000 head last week and 2,368,000 head a year ago.
Feeder and stocker prices were somewhat mixed this week. At Oklahoma City, feeder cattle were steady to $2 lower in a light test; calves were steady to $2 higher. In Lexington, KY feeder steers and heifers were steady. Stocker steers were mostly steady, with top quality 500 to 600 pound steers $1 to $3 higher. Stocker heifers were weak to $3 lower. At West Plains, MO, prices were generally steady to $2 lower than last week; though 6-weight heifers were noted to be $2 to $4 lower than last week. In Arkansas markets, steers under 550 pounds were $1 to $3 higher. Heavier steers were steady to $3 lower. Heifers were mostly steady to $1 higher. In Georgia, feeder and stocker steers were $1 to $3 lower. Feeder and stocker heifers were $1 to $2 lower.
In Mississippi markets this week, steer prices were steady, and heifer prices were $1 to $4 higher. Prices for steers (medium and large, 1-2) at Mississippi auctions throughout the week were as follows: 250-300 pounds, $118-$125; 300-350 pounds, $115-$125; 350-400 pounds, $106-$115; 400-450 pounds, $100-$110; 450-500 pounds $96-$100; 500-600 pounds $85-$98; 600-700 pounds $80-$88; 700-800 pounds, not reported. Slaughter cows were $1 lower this week. For the week cows brought $34-$39 for boning cows (850-1,200 lbs) and $30-$39 for lean (850-1,200 lbs).
After a disastrous week last week that saw the nearby contract pushed to new life-of-contract lows, Live Cattle futures managed small gains this week. Gains were not really supported by a great deal of concrete improvement in market fundamentals. There appears to be some hope that the holiday-related seasonal weakness in beef prices may be about to pass. Also, the last two week’s large drop in cattle dressed weights has been a welcome development on the supply side. Live Cattle closing prices on Friday (with the change from last week’s close in parentheses): December $83.95 (+0.63); February $85.43 (+0.27); April $88.05 (+0.35); June $85.18 (+0.45); August $85.50 (+0.38); October $88.30 (+0.30).
Feeder cattle futures have been buffeted recently not only by weakness in meat markets but also by the jumpy corn market. This week, stabilizing Live Cattle futures and a more-or-less quiet week for corn at least slowed the descent of Feeder futures. On Friday, with the monthly Cattle on Feed report waiting in the wings, most Feeder Cattle contracts managed to post modest gains for the first time in a while. Feeder Cattle futures closing prices on Friday (with change from last week’s close in parentheses) were as follows: January $92.68 (+0.10); March $93.58 (-0.02); April $94.93 (+0.38); May $95.90 (+0.40); August $98.10 (+0.90).
Corn futures started the week higher and continued that way through early Wednesday trading before moving lower for the rest of the week. In the latter half of the week, outside market influences (i.e., the dollar and crude oil) became considerably less supportive of the corn market. This year’s sharp rally in the face of the second largest harvest on record has been supported by a marked decline in the value of the dollar and an attendant increase in the value of crude oil. A break in that recent pattern to end this week helped pull some support out of the corn market. Notable harvest progress was another bearish factor this week. While harvest remains behind normal, the completion of bean harvest is allowing farmers to focus on getting corn out, meaning that the end is finally in sight for this year’s crop. On Friday, December corn closed at $3.91, down ½ cent from last Friday.
Wholesale beef prices were a bit mixed this week. The Choice cutout held basically steady. Through Friday, the weekly average Choice cutout value was $140.10, up 16 cents from last week. On the other hand, the Select cutout averaged $132.26 this week, down $1.63 from last week. Movement was all right this week, with an impressive 450 loads of cuts, trims, and grinds moving on Wednesday.
Source: John Michael Riley and John D. Anderson, Department of Agricultural Economics Mississippi State University