Compared to last week, feeder cattle and calves weighing over 600 lbs sold steady to $3 lower. Lighter-weight calves traded unevenly steady to $5 higher with the full advance noted on 4 weight steers, especially across the Southeast.
CME cattle futures opened the week significantly lower which pressured cash feeder cattle, perhaps hinting that prices are now descending the back-side of the mountain top. However, lower price levels on feedlot replacement cattle are inevitable this time of year as a larger percentage of these cattle are merely big calves while true yearling supplies have been exhausted.
Calf demand remains very good as tight inventories of all classes of beef cattle are now blatant and many areas have sizeable stockpiles of hay and winter pasture to hold calves. Backgrounders are also already worried about their ability to purchase grazing cattle next spring.
There was some weakening of calf markets late in the week as Southern order buyers didn’t want to get stuck with partial loads with Thanksgiving week coming up, plus another winter front moved across the Plains with freezing rains and snow flurries. Cattle can withstand frigid temperatures very well, but cold and wet is another story especially on new purchases.
Friday’s cattle-on-feed report appeared slightly bearish with October placements coming-in higher than most expectations at 110 percent of the same time a year ago. November 1st on-feed inventories were down 6 percent and exactly as expected, while October fed marketings were within forecasts at 101 percent of 2012.
The heavier placement figure could dampen wild desires about feeding cattle for the great beef shortage, but the data is very reasonable as most producers were able to hold their feeder cattle to term this fall as opposed to last year’s summer drought sales.
Nationwide auction receipts have indeed ran about 9 percent heavier than a year ago for the last several weeks since the government shutdown. But, the recent increase in heifer retention with help from ample feed supplies and brisk calf markets should more than offset any additional placement miscalculation. A percentage of last month’s new feedlot arrivals are likely replacement quality heifers to be grown through the winter months only to be turned out with a bull next summer.
Nonetheless, the new (old school) corn price is quickly pouring equity back into cattle feeder’s pockets and bolstering interest in all classes of feeder and stocker cattle with cost-of-gains well below the expected fed market.
This past week, fat cattle sold mostly $1 lower at $131 live and $207 in the beef. This week’s reported auction volume included 40 percent over 600 lbs and 39 percent heifers.