Compared to last week, the downtrend again continued this week with last Friday’s sales and early week sales this week catching the full brunt of price declines as Cattle futures last Friday were limit lower and sharply lower on Monday to start the week. Early week sales were 10.00-20.00 lower with several sales 25.00-30.00 lower. The Board showed some footing on Tuesday with sharp gains and some light follow through buying on Wednesday made cattle feeders feel a little better for a change as prices from mid-week on were mostly uneven, trading 5.00-10.00 lower in most cases. The most decline this week was on calves weighing 450-650 lbs with the 5 weight steers feeling the full decline.
Cattle buyers showed some caution this week on calves that will go to grass as they try to fill their needs early enough to get their stockers assembled and straightened out before offerings tail off. Bearish signals continue to lead the way in the cattle markets as pressure comes from several factors: the CME Board remains very volatile searching for direction after the enormous sell-off in December and January; declining boxed-beef prices; a steadily rising U.S. dollar that is at a near 11 year high. All when added together can become troublesome on the market. The Stock Market has also had a rough time this week as stocks tumbled on weak data and disappointing earnings of Blue-Chip companies this week. With the dollar at an 11 year high, exporters are hurt as their goods become more expensive on the global landscape. It also eats into the profits of companies that see a significant amount of their sales abroad.
Two weeks ago, boxed-beef prices hit an all-time high at 263.81 on Choice product and it seems this was all but ignored. Since then Choice product has fell over 21.00, closing on Friday at 242.44. The bearishness of the feeder and fed cattle markets have also spilled over into the slaughter cow market. This market is seeing steep declines of 10.00-20.00 lower over the last several weeks. This past fall saw droves of feeding cows being bought with competition from ranchers/feeders looking to either harvest another calf from the old girl or put some cheap weight on her. With much cheaper feed and a good outlook made feeding cow outlook attractive. Three months later and markets are lower with supplies of these cows coming back to the auctions especially in the Northern plains with packers bidding substantially lower.
The feeder cattle prices seen over the last couple of weeks may be more realistic than the record prices we saw last year. The U.S. Cattle Inventory report was released Friday afternoon with all cattle and calves in the U.S. as of January 1, 2015 totaling 89.8 million, 1 percent higher than the 88.5 million head from a year ago. All cows and heifers that have calved were at 39 million head, up 2 percent from 38.3 million head a year ago, while beef replacement heifers were at 5.8 million head up 4 percent. This week’s auction volume consisted of 61 percent over 600 lbs and 37 percent heifers.