Compared to last week, the bulk of the yearling sales were unevenly steady to weak with downside pressure prevailing early in the week and several mid-to-late week auctions quoting higher prices. Heavy offerings of unweaned calves met only light to moderate demand and sold weak to 5.00 lower with instances as much as 12.00 lower, especially in the drought regions of the Southwest where outlets are currently very tight for these types.
Trading is still active on longtime weaned calves, but most producers with the luxury of feed, forage, and facilities for added value have either forward contracted their calves or plan on holding them until after a hard freeze. The “fall-run” is now underway and the amount of management behind calf offerings is much more indicative of their selling price than is quality or condition. This is especially prevalent in the Southern Plains where the stress of the long, hot summer has now been accompanied by wide temperature swings (up to 60 degrees within a 24 hour period), dusty pens, and the separation from their mothers which is more than many of these tender calves can stand. Plus, Southern feedlot and growing yard pen space is very limited with even abandoned and bankrupt facilities holding nearly three rounds of feeder cattle supplies - not to mention a fair number of thin cows destined for slaughter once they put on some weight and the herd sell-off slows down.
Corporate and major commercial feedlots farther north also have a larger than normal inventory of lightweights, but the more numerous independent lots and farmer feeders are pushing their bids for true yearlings or hard calves to hit the handsomely forecasted spring fed cattle market. Monday’s USDA Crop Production and Supply/Demand Report eased winter feedcost fears a bit as an increase in corn production in other areas (namely South America) more than offset the lower US crop estimates. America’s average yield estimate fell to 148.1 bu/acre but late in the week new crop December CBOT corn contracts fell below 7.00/bu for the first time since August 10th. Lower corn lent support to CME Feeder futures which allowed out front cattle sellers to write basis contracts several dollars higher than in recent weeks but the fed cattle trade failed to materialize as packers and feedlot managers played cat and mouse to a virtual draw. Wednesday’s spot CME October Live Cattle futures closed at 121.00 and it appeared the fed trade would gain at least a dollar or two, but cell phones fell curiously silent with few cattle feeders ever receiving a solid bid or even a courtesy call.
By Friday afternoon there were 5 area negotiated cash sales for the week of less than 60,000 head (near one third of normal movement) and the only trade with enough volume to establish a market was Kansas 1.00 lower at 117.00 and Nebraska with minimal sales steady at 187.00 dressed. Chain speeds were reduced late in the week but a significant drop in beef processing will be hard to achieve as year to date exports of US beef continue to run 27 percent higher than last year while our beef imports are 16 percent lower so far for the year. This week’s reported auction volume included 46 percent over 600 lbs and 44 percent heifers.