Feeder Cattle Review: Feedlot bound cattle near price ceiling

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Compared to last week, feeder steers and heifers sold steady to 3.00 higher with the full advance noted in the Southern Plains and the Mountain States.  The Northern Plains were only steady with some areas actually showing weakness off of some of the highest feeder prices in the nation.  Stocker cattle and calves traded 3.00-7.00 higher once again with orders pouring into the Southeastern calf markets as we creep ever so closer to grass time from this unprecedented mild winter. 

This time last year a huge winter storm dumped up to 20 inches of snow across the Midwest with actual temperatures as much as 30 degrees below zero, closing major auction markets throughout the area.  Feedlot bound cattle seem to be nearing a price ceiling as the fed cattle market has stalled-out and packers have cut kills to limit their immediate needs.  Recent weeks have seen the lightest non-holiday week cattle slaughter since March of 2009, when a late season snowstorm caused plant closings.  Stocker buyers do not seem to be feeling the high market pressure as new orders for calves roll-in each week. 

Inexpensive weight gains on early spring forage offer the ability for grass interests to cheapen these cattle back into a reasonable profit margin.  Thin-fleshed stockers with enough age to take full advantage of early season grass can easily yield gains from 50-60 cents a pound which is more than 1.00/lb cheaper than that pound is worth.  Hence, it won’t take long for a 5 weight steer costing near 200.00 to reclaim the 158.00 that is presently being advertised by the summer CME Feeder Board.  Major grazing areas in Oklahoma and Kansas continue to receive moisture and grazing prospects are fairly bright. 

Calf buyers were optimistic at the Torrington, WY Livestock Commission on Wednesday with over 5300 head on offer.  Over 750 head of top quality 5 weight steers averaged 552 lbs at 197.61 with another 270 head flagged as fancy averaging 543 lbs at 203.78.  An additional 500 head of fancy light-6 weight steers averaged 613 lbs at 186.68.  Friday’s fed cattle trade was similar to this week’s feeder cattle market with the Texas Panhandle and western Oklahoma feedlots selling 1.00 higher at 124.00, while Kansas and the Northern Plains were steady to 1.00 lower from 123.00-123.50 live and 197.00-198.00 dressed. This week’s reported auction volume had 53 percent over 600 lbs and 42 percent heifers.       



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