Late August declines in USDA’s five-area accumulative average cattle price set a rough trend for September, with cattle prices making a $9.70 crash in the two-week period from Aug. 29 to Sept. 12. The second week of September was the lowest point of the month, drop-ping to a low of $104.99 per cwt before bouncing to the month high of $109.40 per cwt the following week. September’s five-area cattle prices ended on a decline at $105.76 per cwt.
Each week, Drovers surveys more than 80 cattle industry experts across the country for their market projections. The bearish market proved to be difficult for our experts to predict, with the break for Labor Day throwing their estimates by $6.62 per cwt on Sept. 12. The following week, they braced for another hard fall and overestimated the drop by $2.73 per cwt. As feedlot margins perked up in the last week of the month, so did optimism, causing an overestimation of $4.76 per cwt.
September’s feedlot margins were sure to take cattle feeders’ pocket books with them as they ended the summer. From the last week of August, margins went from negative $59.29 per head to negative $120.02 per head the first week of September. The heaviest hit came in the second week of the month, with feedlot margins sitting $202.29 per head. Quicker than anticipated herd expansion has attributed to price decline as a surplus of calves and cull cows flood the market.
While prices were tough to swallow, it wasn’t as bad as the same time period in 2015 when cattle feeders were losing $217.68 per head. However, the end of the month relieved pressure with a rally during the week of Sept. 16 that jumped feedlot margins up $112.69 per head, to only sitting $89.60 per head in red. The last week of September was also optimistic, making a $48.28 per head rally to negative $41.32 per head.
USDA’s September Cattle on Feed report was released on Sept. 23, with placements up 15%, at 1.88 million head and marketings up 18% at 1.87 million head.
Note: This story appeared in the October 2016 issue of Drovers.