Feeder cattle review: Cattle market encounters hurdles

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Compared to last week, feeder calves and short-yearlings weighing over 600 lbs opened the week 3.00-5.00 lower which turned to 4.00-8.00 lower by week’s end.  Lighter-weight steer and heifer calves traded unevenly steady with trends ranging from 5.00 higher to 5.00 lower with the higher prices again earlier in the week. 

The tight-supply driven joy ride that cattle markets have enjoyed recently in the face of severe feed shortages and the struggling economy encountered hurdles in its path this past week.  Pressure began with last Friday’s USDA report that drastically lowered grain stock estimates and placed  fear within the agricultural markets that rationing may become a reality (most likely through pricing). 

CME cattle futures latched on to the lead balloon and immediately weighed on cash feeder markets which already entered the week with many outlets clogged from last week’s heavy movement.  More bearish news surfaced on Thursday that Cargill plans to halt production at its Plainview, TX  beef processing facility, wiping out 4500 head harvest capacity per day.  Nearby  CME Live Cattle contracts lost nearly 8.00 in just eight trading sessions while January Feeder Cattle futures fell over 9.00.  Direct fed cattle sales were  1.00-2.50 lower from 122.50-125.00 after the cash market nearly eclipsed the  130.00 all-time record just two weeks earlier in Colorado. 

Many major salebarns  in the Rocky Mountain state are seeing their heaviest receipts of the year  during the annual Stock Show Specials that coincide with the National Western in  Denver.  Unfortunate timing of the volatile feeder market will cause wide price  spreads in the marketing of these high-country cattle.  However, many impressive  sales of hardened winter proof feeders can be found around the circuit, like  over 650 head of fancy 650-700 lb steers in Bassett, NE on Wednesday that  averaged over 170.25.  But overall demand was much better for lightweight  stockers as more grass grazers enter the market each week with the understanding that supplies are already dwindling and will be down to a trickle by spring. 

Not only can these light cattle achieve cheap gains if pasture develops, they can also be finished on corn from the 2013 new-crop.  Calves under 450 lbs conceivably could get higher every day until June and any moisture between now and then should increase the rate of speed as these cattle have all the options. 

Any calves much heavier than 500 lbs will be unfit for grass by April and unlike other times of the year, the bulk of current calf sales will not be offered back on the feeder market.  Heavy rains and wintry conditions curbed receipts and demand in the deep Southeastern calf markets, but this area should reap the rewards of their ample moisture somewhere down the road.  This week’s reported auction volume had 58 percent over 600 lbs and 42 percent heifers.



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