Weaker futures, sluggish demand hit cattle markets

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A softer futures market and weaker beef demand pushed cash fed cattle prices $3 per hundredweight lower last week and dressed sales $4 to $5 lower. Live cattle traded at $123 per hundredweight and dressed sales were recorded at $190 to $192. Packers begin this week needing cattle to keep the supply channels flowing.

Boxed beef prices declined significantly last week as Choice beef traded at $188.98 on Friday, $4.36 lower than the week before. Select boxed beef traded Friday at $177.85, down $6.01 per hundredweight. The Choice-Select spread grew to $11.13 per hundredweight. Analysts expect demand to improve through October.

Feeder cattle prices were called unevenly steady, with price pressure on calves more pronounced. Calves were called weak to $4 per hundredweight lower. Demand for the lighter cattle will pick up again if rains across the southern plains increase wheat pasture grazing.

The weaker tone in the Chicago futures trade also impacted the feeder cattle and calf markets. USDA Market News reporter Corbitt Wall called Tuesday’s sharply lower futures market the “catalyst for lower cash feeders” as “investment funds suddenly pulled from Chicago’s Live Cattle pit. Yearling buyers immediately lowered their bids in an effort to keep their purchases within ear-shot of a fully hedged position.”

Wall says lower corn prices the past couple of weeks have aided yearling buyers’ ability to hedge cattle, but Friday’s limit gains on corn contracts suddenly made that proposition more difficult.

“The (futures markets) had little to do with lower calf markets, as fall weather patterns were more to blame,” Wall said. “Typical hot days and cool nights are taking their toll on newly purchased un-weaned calves and sick-pens are starting to swell.  Backgrounders want to take a break before taking-on additional shipments and many who farm their own wheat need some tractor time to sow this fall’s pasture.”

Last week’s auction receipts totaled 233,800 compared to 224,100 last week and 225,700 last year. Direct sales of stocker and feeder cattle totaled 34,400 with video/Internet sales at 59,600. The weekly total was 327,800, compared to 359,200 last year.

Slaughter cows and bulls sold $2 to $5 lower. USDA's Cutter cow carcass cut-out value Friday morning was $160.67, down $1.39 from the previous Friday. Omaha cash corn was 23 cents per bushel lower for the week at $7.13 per bushel.

USDA’s grain stocks report on Friday was bullish for corn prices. Corn ending stocks for 2011/12 were estimated at 988 million bushels, approximately 132 million bushels below trade estimates and nearly 200 million bushels below USDA’s September 2011/12 ending stocks projection.



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