Feeder cattle review: Finished cattle unseasonably heavy

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Compared to last week, calves sold unevenly steady and yearling feeders ranged steady to 4.00 higher on light Memorial Day holiday receipts.  Most auction markets were closed on Monday and direct trade was slow to develop as the (CME) Chicago Mercantile Exchange was shuttered on Monday and then traded lower until late in the week. 

Last Friday, the CME Feeder Cattle contract moved from the May to the August spot month which left about a 6.00 gap between the current cash index and the nearest available futures quote.  Seasonally light sales volume and rabid demand for yearling feeders could allow the index to catch-up quickly, especially on Fridays when the direct sales information is entered. 

Cash feeder cattle sales (especially on a direct basis) have been about the only element of the commercial cattle arena that has reacted appropriately to May’s bullish cattle-on-feed report.  Data from the report also suggested that there will be significantly heavier supplies of market-ready cattle through the first part of the summer.  Plus, weights of finished cattle have been heavy for this time of year which has partially made up for tighter numbers and smaller harvest. 

Replacement feedlot cattle are hard to buy and many cattle feeders find it easier to put extra pounds on those already owned. Outstanding performance and the use of finishing feed additives (Zilmax) have improved feed efficiency and dressing percentages to add an extra 15-18 lbs per carcass. 

Beef production is down 3 percent so far for the year, but would be down well over 5 percent if carcass weights had not increased.  Pasture gains are also likely to be impressive this year as slightly dry conditions in the major grazing regions may cause cattle to come off early, but the roughage is sticking to their ribs and not washing through as it does when the grass is too wet. 

Much of the Southwest United States is having deja-vu as high winds and the lack of moisture have eliminated the slight relief seen earlier in the year. Much needed Corn Belt rains aided this year’s massive corn crop and newly planted soybeans this week as prices continued to drift lower.  Northern feedlots and independent farmer feeders are battling each other for the light offerings of available feeder cattle.  At the United Producers Inc. Maryville market in extreme northwestern Missouri a load of 915 lb steers brought 150.25, followed by a load weighing 950 lbs at 146.25, and another tipping the scales at 1040 lbs that sold for 137.00.  Feedlots sold mostly steady from 121.00-122.00 this week but were able to stick about a 4.00 basis in their pocket from the lagging Board.  Meanwhile cow/calf producers in Valentine, NE purchased young black-hided pairs at the salebarn from 2175.00-2860.00 per pair.  This week’s reported auction volume had 50 percent over 600 lbs and 43 percent heifers.



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