Boxed beef values soared $7 to $8 per hundredweight higher last week as retailers geared up for the Labor Day weekend. The price surge was led by ribs, loins and trimmings, pushing Choice boxed beef prices to $193.03 per hundredweight on Friday, $8.08 higher than the previous Friday. Select boxed beef closed the week at $184.72, an increase of $7.07. The Choice-Select spread stood at $8.31.
Strong retail demand turned packers into aggressive buyers resulting in a $1 to $2 per hundredweight advance for cash fed cattle. Cattle sold at $120 to $121 per hundredweight with a few late-week sales in the south at $122. Dressed sales in the north were established at $188 to $190 per hundredweight.
Supplies of market-ready cattle continue to decline, and coupled with increasing retail demand, prices for fed cattle should remain steady to stronger this week. Fed cattle prices have increased $8 per hundredweight off the summer lows, and further gains are anticipated in the coming weeks, though analysts believe the pace of the increase may slow.
Market leverage is shifting into the cattle feeder’s hand, and margins will slowly improve. Packer margins are likely to erode further.
Markets for feeder cattle and calves continue to show resiliency despite an historic drought and near-record corn prices. Yearling feeder cattle sold firm to $5 per hundredweight higher and calves traded fully $3 to $6 higher with instances of $10 higher.
USDA Market News reported Corbitt Wall noted both calf and yearling markets found the full advance on steers, while heifer sales mostly represented the lower ends of the advances. Last week was the third consecutive week of higher feeder cattle and calf prices.
“Despite very little (if any) relief from the extreme drought that has overtaken the bulk of our nation, including all of the major cattle feeding regions, buyers flexed their muscle in pursuing all classes of feeder cattle in the face of historically high feed prices,” Wall says.
“After two straight years of exceptional drought, encompassing most of the major cattle producing states and the subsequent herd sell-off, backgrounders are banking that cattle of any class will be good property to own in the next calendar year. CME feeder cattle contracts are currently priced progressively higher through May of 2013” Wall says. “The challenge lies in keeping these cattle fed through the fall and early winter when many market members expect certain weights of feeder prices to eclipse all-time record levels reached in May of 2012.”
Last week’s auction receipts totaled 159,700 compared to 141,800 last week and 200,100 last year. Direct sales of stocker and feeder cattle totaled 63,400 with video/Internet sales at 147,800. The weekly total was 370,900, compared to 240,00 last year.
Slaughter cows sold $3 to $7 per hundredweight lower and slaughter bulls sold mostly steady to $5 to $8 lower in the north. USDA's Cutter cow carcass cut-out value Friday morning was $166.42, up $2.61 from the previous Friday. Omaha cash corn was 14 cents per bushel lower for the week at $8.07 per bushel.