Feeder cattle review: Calves, yearlings hit 2013 with steam

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Continued light holiday marketing of feeder cattle through the first week of 2013 was not enough to establish a price trend.  However, the few high-volume auctions in the Northern Plains that were well tested and the sizeable direct country sales in Texas both quoted feeder steers and heifers selling higher.

Some auction markets throughout the country that had sufficient numbers of lighter weight calves to entice buyers had undertones that were sharply higher.  Unlike some years in recent history, nothing bad happened to the commercial cattle markets through the two week holiday break.  In fact, a few auctions this past week showed the feeder cattle market entering the New Year like a college bowl team running onto the field.  On Thursday, at the Ogallala, NE Livestock Market there were over 6800 head of fresh western Nebraska feeder cattle on offer.  There were over 1100 head of top quality 700-800 lb steers that averaged 743 lbs at 153.46, around 250 head of fancy replacement quality 550-600 lb heifers averaged over 1050.00 per head. 

Both calves and yearlings appear to be hitting the first full week of marketing in 2013 with a head of steam, but in fact feeder cattle prices are very near where they were a year ago.  Fed cattle are roughly 5.00 higher than the same time a year ago with spring CME Live Cattle contracts quoting fats nearly 7.00 over the all-time record high of 130.00. However, the complexion of the weekly cowboy vs. packer competition has changed dramatically of the years with the overwhelming majority of feedlot managers no longer wringing their hands late in the week over what price they will sell their showlist.

The continued vertical integration of the industry coupled with the addition of new highly productive feed additives that limit a cattle feeder’s shipping flexibility has caused most slaughter steers and heifers to be sold on some sort of contract or formula basis.  According to USDA Market News Mandatory Price Reporting, during 2012 only 27.8 percent of the finished cattle in the 5 Area Feeding Region were sold by a negotiated cash method (compared to about 50 percent just five years ago).  The heavily farmer-feeder influenced Iowa-Minnesota region had the most with over 56 percent of cattle marketed by accepting a negotiated cash bid, while Texas had by-far the least with barely 10 percent of the volume being haggled upon. 

Winter weather has set-in with most of the major cattle production areas experiencing frigid temperatures and at least a skiff of snow.  Winter wheat pasture failed to fully develop in most parts of the Southern Plains and many of the stockers that were turned out are reportedly being moved into confined facilities for feeding.  Next week should be very active as the first full week of marketing in January is annually the heaviest auction volume of the year.  If the weather cooperates, the size of next week’s run should be a good precursor of how light 2013’s volume will be.  This week’s light reported auction volume had 68 percent over 600 lbs and 37 percent heifers.  



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