Feeder cattle review: Dry conditions limit demand for yearlings

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Compared to last week, yearling feeders sold mostly steady with instances as much as 2.00 higher.  Calf prices continued to trend unevenly, from 5.00 lower to 5.00 higher with the full declines posted in the drier areas of the Southeast.  Receipts were fairly heavy following last week’s holiday interrupted Monday markets, with many of this week’s higher yearling trends just now realizing last week’s gains.  However a good portion of the heavier receipts were due to dry conditions forcing cattle to market in places like Missouri and Arkansas which sold 91 percent and 140 percent more cattle than the same week a year ago, respectively. 

At the Ozark’s Regional Stockyard in the extreme south-central Missouri town of West Plains that regularly sells cattle from both states, they have sold 16,300 head of feeder cattle over the last three weeks compared to just over 4500 during the same period in 2011.  Conditions may not be as severely dry as the Southwestern United States was last year, but the Acorn Belt is a rough and rocky country of heavily concentrated cow/calf production that normally permits fairly heavy stocking rates this time of year. 

Around 250 miles to the north, the southern half of the Corn Belt is also suffering from a lack of moisture as late planted corn and soybean fields are dreadful.  Early corn is rooted down and much more attractive to the eye, but rainfall is needed soon or this year’s grain production will fall well short of lofty expectations. 

Dry conditions are also keeping the demand for this spring and summer’s yearling feeders under wraps.  Many market participants believed grass yearling prices could get out of hand this year with tight numbers available.  Although impressive, the market still lags well behind the all-time record highs posted in late February (CME cash feeder cattle index on 2/24/12 of 157.44 based on a 750 lb steer, compared to the latest available of 155.14).

Cattle feeders would like to see an impressive corn crop a little closer to the bin before breaking new ground on direct or video contract sales for late summer yearlings.  That’s not to say prices can’t get impressive when buyers can see quality, flesh, and weighing condition standing in the ring in front of them as was the case in Ogallala, NE on Thursday when over 400 head of top quality 700-800 lb steers sold with an average weight of 762 lbs and an average price of 162.54.

Fed cattle saw a surprising spark in the CME Live Cattle futures on Thursday and took advantage with live sales 1.00-1.50 higher from 122.00-123.50. Slaughter rates seasonally peak during June, which could help the fat market trudge through the next month or six weeks of heavier showlists that analysts have predicted.  However, not everyone is convinced of heavier market-ready supplies and these stories can only be partially confirmed by eye witnesses on the ground.  This week’s reported auction volume included 51 percent over 600 lbs and 43 percent heifers.



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