Compared to last week, all weights and classes of feeder cattle and calves sold mostly 10.00-15.00 lower and many instances 20.00 lower.
The market caught up with lower sales late last week and then declined even more as the joy ride that cattle markets have enjoyed encountered hurdles in its path this week. Pressure began late last week as CME Feeder Cattle futures closed limit lower last Thursday and got caught up in an ugly free-fall that continued for the next four sessions of limit losses (before finding its footing on Thursday this week) weighing like a lead balloon on the feeder markets; which already entered the week with many outlets clogged from heavy auction movement of feeders over the last several weeks.
There were many cases in feeder cattle auctions this week where the unweaned, fleshy, full, short, off-colored, or merely plain cattle quickly fell off the face of the market report. It has quickly become for the month of December, "The Grinch who stole Christmas"(he’s a mean one that Mr. Grinch) leaving lumps of coal in the stockings of the cattle markets; so far it has not been very Merry. More bearish news with the cash fed cattle market declining sharply over the last three weeks going from 173.00 to 156.00-157.00 on live sales in Kansas this week. Some support was seen on Friday afternoon as some live sales in Nebraska rebounded to sell at 160.00. Choice Boxed beef has dropped near 19.00 since the first of December with Choice product closing at 238.57 on Friday. Markets can and will correct on short notice and mostly when the producer least expects it.
The continuing slump in oil prices is keeping investors hesitant to make new bets on equities before the end of the year as plunging crude oil prices have fallen to around 55.00 a barrel. This should help the American consumer to buy more meat protein or to spend it on something other than gasoline. The Russian ruble has been falling in line with the sharp decline in oil prices, with the ruble plunging to record lows against the dollar. This has an impact in our global markets with economic concerns in Russia which puts a decline in their purchasing power of a large importer. This has the possibility to cloud the demand picture for meat proteins and grains in the near future. Packers will not need to buy many fats the rest of the year with their contracts and formula cattle taken care of, and will only pick on the edges for negotiated sales. It is uncertain how the cattle markets will play out, but so far the cattle feeder has been bailed out by the price enhancement over time in the fat cattle market. Packers have had negative margins for quite some time and are going to try to recapture a profitable margin which takes aim at the cattle feeder.
Friday’s afternoon Cattle on Feed Report was mostly neutral as December 1 inventory was at 101 percent of a year ago; placements at 96 percent of a year ago; marketings at 89 percent of a year ago. The marketing number continues to set milestones as the November marketings bested the October report as being the lowest since series began in 1996. Also in November, the placement total of 1,792,000 head was the second lowest since the data series started in 1996. This week’s auction volume included 46 percent over 600 lbs and 40 percent heifers. All of us here at the Federal/State Market News Service wish all of you a very Merry Christmas filled with fellowship and blessings.