Compared to last week, feeder cattle sold fully 3.00-6.00 lower in both auctions and in the direct trade which reflects the lack of support from CME cattle futures especially on deferred contracts. Stocker cattle and calves traded 3.00-10.00 lower where they were fully tested as early grass in the major grazing areas is not developing due to unseasonably cool weather, plus the market has now fallen so sharply that many have given up hope for a quick turnaround.
Regional weighted average auction prices for all weights and classes of calves and yearlings are fully 20.00-25.00 lower than the same time a year ago when many all-time record high prices were posted. There was still no sign of solid footing in the market this past week, and if cattle feeders continue to figure breakevens on current feedcosts the market still has a ways to fall.
Feedlot operators are now certain that they cannot show a profit with 7.00/bu corn as the feed bill on full tenured closeouts can easily surpass 750.00 per head. Likewise, cow/calf producers are finding out that they cannot affordably maintain a herd if depleted hay stockpiles force them into paying over 100.00 for a big round bale. However, relief is within sight for grazers as late winter storms have lent enough moisture to at least kick-start pastures, but prevailing cool and cold weather north of I-40 has producers waiting on pins and needles.
Friday’s cattle-on-feed report was continued confirmation that feeder cattle inventories are dropping with the March 1st on-feed total and fed marketings 7 percent lower than the same time last year which was near expectations. But, February placements were only 86 percent of a year ago which was much lower than expected and indeed lower than the lowest analysts’ guess. Extremely tight availability of feeder cattle is currently being coupled with light demand, which completely goes against even the most basic of economic lessons. Cash fed cattle sold lower again this week from 124.00-125.50 live which was 1.00-2.00 lower and mostly 198.00 in the beef which was 3.00 lower.
Dressed beef movement continues to be sluggish and resistance from retailers to entertain higher price levels caused the Choice/Select spread to be inverted during some of the week’s trading sessions.
Cattlemen now have all their hopes and dreams tied to lots of rain and lots of sunshine which is the only long-term solution to troubled times. Farmers will soon be in full planting mode on what will likely be another record number of acres. Ending corn stocks will be dangerously low by the time the new crop arrives, but with easy-to-underestimate on farm storage - there may be as much corn out there that we don’t know about as there is reported bushels. The calendar insists that spring has arrived but it may be hard to convince those of us facing the reality of hiding Easter eggs in a snow drift. This week’s reported auction volume included 60 percent over 600 lbs and 42 percent heifers.