Compared to last week, the feeder cattle market to start the week attempted to rally back despite sharply lower futures with early week sales on feeders under 800 lbs selling 5.00-15.00 higher and yearlings over 800 lbs mostly steady to 3.00 higher. From midweek on, the rally started to disintegrate as futures failed to find support and continued with sharp losses with most markets trading very uneven. Yearlings over 800 lbs mostly 4.00-8.00 lower and calves very uneven from steady to 10.00 lower. In the Southeast feeder calves sold mostly 3.00-10.00 higher.
The January thaw came to an end this week as it is now clearly in the rear view mirror as “Old Man” winter returned to much of the country. Sub-zero temperatures and snow throughout the Northern Plains and Midwest along with with freezing temperatures throughout the Southern Plains curbed receipts in many areas. On Monday the Bears came out and pretty much erased all of last week’s gains as the Bear continues to prowl in the cattle complex.
To start the week, futures seemed to be playing off USDA’s Cattle Inventory Report creating another round of anxiety for the cattle futures. The Inventory Report reflected larger herd rebuilding than had been anticipated as most analyst were looking for unchanged to slightly lower numbers than USDA. The total inventory was 1 percent above year ago totals putting all cattle and calves at 89.8 million head; this is still the smallest total herd inventory since 1952. The beef cow herd expansion came in at 2.1 percent higher; this was larger than expected with the largest increases in Texas and Oklahoma.
The 2014 calf crop came in at 33.9 million head up 1 percent. Though this is larger than last year, numbers still remain tight. There were good indications of beef heifer retention as that total is reported up 4 percent at 5.8 million head. The Inventory Report represents long term in nature and little direct effect on immediate supplies as it doesn’t create more cattle for 2015. With all the bearishness in the cattle markets it none the less doesn’t help near term outlooks or cattle futures psychology as it just fits in with all the negativity going on in the markets. This is a market that needs to find confidence in fundamentals that matter enough as cattle futures seem to have a one track mind at this time as futures continue to disconnect from the cash market. Current world problems and troubled currencies, along with a high dollar, oil prices, West Coast port slowdown, strong demand from competing meats of pork and chicken are not going away anytime soon and will continue to affect mindsets of all commodity markets. Auction volume included 63 percent over 600 lbs and 37 percent heifers.