Compared to last week, feeder cattle under 800 lbs sold steady to 3.00 higher while those weighing over 800 lbs traded weak to 2.00 lower with most declines continuing in the Southern Plains. Stocker cattle and calves (where tested) were steady to 5.00 higher with 6 weight stockers near the major grazing regions selling fully 6.00-8.00 higher. In the South Central Region, all reported sales of 600-700 lb steers averaged 195.74 which was 7.17 higher than last week and over 50.00 higher than a year ago.
Purchasing of grazing cattle is at its peak and most cattle growers want to turn-out a stocker big enough to be an 800 lb yearling feeder by late summer or early fall. Forward contracting of fall yearlings is already at a sizeable premium to current delivery sales and starting to hint that price levels could go much further.
However, Friday’s cattle-on-feed report brought the first bearish signal to the feeder cattle market seen since the last report was released a month ago. On-feed inventories as of March 1st came in slightly higher than estimated, but were still lighter than the previous year (99.5 percent) for the nineteenth straight report. Marketings of finished cattle during February were less than forecasted at 96.6 percent. Placements were once again the biggest surprise, quoted at 114.7 percent of a year ago which was well above pre-report guesses. But, we must remember the February snowstorm that hit the Southern
Plains last year and crippled the movement of cattle going into feedyards. The bearish report will likely be felt next week on the CME feeder cattle futures and perhaps in the cash market, but will most likely not be enough to extinguish the red-hot demand.
There’s no doubt that feeder cattle prices are top heavy and vulnerable for a tumble if a strong enough push comes along. Of all the factors that could be responsible for such a blow, dry weather is the most likely culprit. Early spring is always dry and windy in the Southern Plains, but the Texas Panhandle and surrounding areas are experiencing “Dust Bowl” like dust storms. Farther north, the Midwest is still reeling from the brutally cold winter but many areas (like Kansas and Nebraska) did not receive all that much measurable snow along with the subzero temperatures and blowing flurries. Spring rains cannot come fast enough, because April showers not only bring May flowers but also the grass and subsoil moisture that farmers and ranchers need to make it through the rest of the year.
Fed cattle sold steady to 2.00 higher than last week from 150.00-152.00 with gains posted in the Southern feedlots. This week’s reported auction volume had 59 percent over 600 lbs and 42 percent heifers.