Feeder cattle review: Feeder cattle availability tightens

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Compared to last week, feeder cattle over 750 lbs opened the week slightly lower but closed steady to 2.00 higher following a midweek rally in the CME cattle futures.  Calves and short-yearling stockers sold 3.00-8.00 higher on their continued path to the moon as grass interests aggressively bid on cattle as if it were mid-March.  Buyers placed premiums on the thin-fleshed calves even though the groundhog promised another six weeks of winter. 

So far, the winter of 2011-2012 has been the mildest on record for many major cattle production areas – causing backgrounders to forget how miserable a snowstorm or blizzard can be on new purchases (especially those without much flesh cover).  A heavy moisture front moved over the Rockies and onto the Plains late in the week, bringing with it heavy snows to the north and beneficial rain to the south.  The full advance of the feeder market was noted on the females as the steer/heifer discount has narrowed to its tightest point in recent memory, the result of steer buyers searching for ways to cheapen-up on the average to lower quality kinds and additional competition from replacement buyers on the highest quality offerings. 

This week’s heifer price levels would have sounded high for steers just a few weeks ago.  A fancy load of 575 lb girls in Valentine, NE brought 189.00 on Thursday and 5 weight heifers sold as high as 175.00 as far south as San Angelo, TX.  The semi-annual cattle inventory report reaffirmed the interest in owning heifers with the total cattle and calf population in the United States the smallest in 60 years.  In 1952, the number of people living within our borders was roughly half as large as today; a gallon of gas cost 20 cents, a pound of hamburger was 53 cents, and Elvis Presley was a high school student working part-time as a theater usher. 

The availability of feeder cattle will be even tighter for the next couple years as heifers are retained and producers begin to expand their herds.  However, feedlots may have a hard time convincing packers that they need to continue paying more for fed cattle just because feeders have been consistently higher.  The last two weeks, the American packing industry has cut kills and become stubborn in the weekly haggle as they insist they can no longer pay over 200.00 for dressed carcasses when Choice boxes are valued just over 180.00.  Another light movement of fat cattle sold this week at mostly 123.00 and 198.00 in the beef, 1.00 and 2.00 lower respectively.  This week’s reported auction volume included 50 percent over 600 lbs and 43 percent heifers.



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