Compared to last week, feeder cattle and calves sold 4.00-8.00 lower with many instances as much as 15.00 lower on calves under 500 lbs. The sharply lower trend initially sounds harsh, but recall how sharp the weekly advances were through the fall and winter months that enabled the all-time record levels that most-all producers were able to enjoy at least a portion of.
The events that released the trapdoor on this week’s feeder markets were largely last Friday morning with the USDA crop report that lowered quarterly corn stockpiles and the ensuing Chicago frenzy that sent nearby corn contracts up the limit and cattle futures down over 2.00. This, along with the general gloominess that has fallen over the beef industry since the sudden consumer distaste for LFTB (lean finely textured beef) was projected by mainstream media, has taken a toll on all classes of cattle. Fed cattle sold 3.00-4.00 lower from 122.00-123.00 and fully 8.00 lower dressed from 193.00-194.00. The basis (difference between the cash price and the spot CME futures price) was the only thing that saved cattle feeders this week. Feedlot managers were working with a 4.00-5.00 positive basis that helped make many of this week’s closeout pens reach their breakeven.
The problem is, the alleys are full of cattle that wash in the mid 130.00’s and the hope of feedcost relief does not appear to be developing. The fastest way to improve breakevens is to pay less for feeder cattle and yearling orders were whittled-down early this week as even Monday auctions felt the full brunt of the market drop. Still, Wednesday specials at Midwestern salebarns at Green City, MO and Bassett, NE showed little (if any) weakness as farmer feeder interest kept price levels inflated. Green City sold a load of 864 lb steers at 152.00, while Bassett featured a big load of thin-fleshed 710 lb steers at 179.00 and 46 head of 700 lb replacement quality heifers at 164.00.
The drop in stocker demand was farther removed from grain and fed cattle markets and had more to do with the fact that most grass orders have been filled. In addition, the grazing condition of available calves is not as attractive to buyers and severe discounts are being imposed on fleshy unweaned types. Backgrounders have been assembling turn-out cattle for months and the early spring has allowed for inexpensive weight gains before Easter and the unofficial OK to breakout the straw hats. The mild winter across most of the nation caused many a cowboy to make the switch early and left the felt in good shape for next fall. This week’s reported auction volume included 50 percent over 600 lbs and 45 percent heifers.