Feeder cattle review: Feedlots feel effect of shrinking herds

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Compared to last week, feeder cattle and calves sold steady to $4 higher with both backgrounders and feeders pushing the envelope for possession.  The trading was just as active on heavy 8 weight feeders as it was for calves weighing under 500 lbs.  However, yearling buyers seemed much more price conscious than calf bidders and there was plenty of speculation in the air this week that the rocket that has been propelling heavy feeder prices is starting to run out of boost. 

The beta-agonist debate continues which in the long run should decrease beef tonnage (depending on how many packers but limits on purchasing cattle that have been fed such products).  But, the longer this discussion goes on - the more likely that consumer confidence levels are vulnerable. 

Hot and dry conditions have settled over the central portion of the United States which will have a much larger effect on soybean yields than the corn crop, but if price levels for one start moving the other normally follows. 

Time is running out to take advantage of summer grilling demand and the fed cattle market remains rather stagnant, even though dressed beef values have made steady gains over the last several weeks.  These reasons, and the fact that feeder prices have been on the rise for thirteen straight weeks, give caution that at least a slight correction may be in order.  Then the August cattle-on-feed report is released this Friday and restores faith that the feeder cattle market is indeed headed for this month’s blue moon.  On-feed inventories as of August 1st came in well below estimates at 94.1 percent of last year.  July finished cattle marketings were well anticipated at 104.5 percent while placements of new feeders ended up even lower than the lowest analysts’ guess at just 90 percent of 2012’s already low placement total.

It has become evident that a smaller cow herd and fewer stocker cattle turned-out in the major grazing regions this spring is finally showing up in feedlot populations.  Winter backgrounders are excited about large hay stockpiles and wheat pasture prospects with demand already soaring for lightweight calves. 

On Monday, the Northern Livestock Video sold 350 head of weaned Wagyu (Japanese breed known for high marbling carcasses) Angus cross steer and heifer calves weighing 440 lbs for 302.50 for December delivery off the Galt ranch near White Sulphur Springs, Montana.  These cattle will undoubtedly need to reach the niche market in which they were intended as they brought more per head than the highest selling yearlings for the week. 

The Torrington, WY Livestock Commission featured a 99 head lot of 813 lb steers at $159 on Wednesday.  Meanwhile, Friday afternoon fed cattle sales started breaking loose at steady money.  Mostly $197 dressed with a few live sales reported from $123-$125.  This week’s reported auction volume included 53 percent over 600 lbs and 38 percent heifers.



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