USDA Feeder cattle market: Buyers flex muscle buying feeders

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Compared to last week, yearling feeder cattle sold firm to 5.00 higher while early arrivals of new crop calves traded fully 3.00-6.00 higher with many instances reported as much as 10.00 higher.  Both calf and yearling markets noted the full advance on steers, while heifer sales mostly represented the lower ends of the advances.

2012 will go down in history as the year that Mother Nature ran a month to six weeks ahead of schedule, from an early spring to early dog day heat to an early harvest and fall-like weather.  Despite very little (if any) relief from the extreme drought that has overtaken the bulk of our nation, including all of the major cattle feeding regions, buyers flexed their muscle in pursuing all classes of feeder cattle in the face of historically high feed prices. 

Calves sold most impressively at the Loup City, NE Commission Co. on Tuesday with the available top quality 3 weight steers averaging 368 lbs at 204.92, and 120 head averaging 450 lbs at 185.01.  After two straight years of exceptional drought, encompassing most of the major cattle producing states and the subsequent herd sell-off, backgrounders are banking that cattle of any class will be good property to own in the next calendar year. 

CME feeder cattle contracts are currently priced progressively higher through May of 2013.  The challenge lies in keeping these cattle fed through the fall and early winter when many market members expect certain weights of feeder prices to eclipse all-time record levels reached in May of 2012.  Most cattle growers would be content to just maintain the health and weight of current calf purchases without trying to post impressive gains with expensive feedcosts.  However, feedcost fears may be eased by the virtual mountain of silage that is being put-up throughout the United States. 

This year’s failed corn crop may drastically reduce the availability of distillers dried grains (DDGs) but once silage pits and piles are given adequate time to cook-out the dangerously high nitrate levels, backgrounders and feeders will have a plentiful source to feed from.  There are many uses for a kernel of corn but silage is only good for feeding cattle.  This feed source is most efficiently used for cows and/or hard yearlings while digestion is more of a challenge for lighter calf weights, however other proteins cannot take advantage of this surplus as chickens and hogs need whole grains which could help beef compete on next year’s grocery budget. 

The fed cattle market gained ground again this week with live sales mostly 1.00 higher from 120.00-122.00, mostly 121.00.  Friday’s cattle-on-feed report was mostly as expected with August 1st on-feed inventories 100.7 percent of last year, placements a little less than thought at 90 percent and marketings also less than expected at 99.7 percent of a year ago.  This week’s reported auction volume included 54 percent over 600 lbs and 41 percent heifers.



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