The fed cattle market has finally begun to shows signs of a rally, stringing together two consecutive weeks of higher prices. Cash trade developed as early as Tuesday this week – a rare event. Prices were mostly $84.50 to $85 on Tuesday in all regions. This is a notable change from last week when prices were relatively uneven, ranging from $84 in Texas to as low as around $80 in Iowa/Minnesota. Prices improved through the week this week, with Thursday’s clean-up sales taking place at prices at high as $86.50 (but mostly $86) in Texas. Cattle slaughter is estimated to be up considerably from last week: 645,000 head this week compared to 629,000 head last week and 646,000 head a year ago. Hog slaughter is estimated at 2,323,000 this week compared with 2,289,000 head last week and 2,293,000 head a year ago.

Feeder and stocker prices were generally higher this week. At Oklahoma City, feeder steers were $1 to $3 higher, and feeder heifers were $1 to $2 higher. Stocker steers and heifers were steady. Receipts at OKC were large – 11,800 head – owing at least in part to some much-needed favorable weather. In Lexington, KY feeder steers and heifers were $1 to $2 higher. Stocker steers and heifers were steady. At West Plains, MO, yearling steers and heifers over 650 pounds were $2 to $3 higher. Steer calves over 550 pounds and heifer calves over 450 pounds were steady. Steer calves from 400 to 550 pounds and heifer calves from 350 to 450 pounds were $3 to $6 higher – with some top quality weaned calves going $6 to $8 higher. Lighter weight calf prices were uneven. In Arkansas markets, steers over 700 pounds and heifers over 600 pounds were steady to $2 higher. Lighter weights were steady to $2 lower. In Georgia, feeder steers and heifers were steady to $2 higher. Stocker steers and heifers were steady to $1 higher.

In Mississippi markets this week, steer prices were mixed, and heifer prices were $1 to $2 lower. Prices for steers (medium and large, 1-2) at Mississippi auctions throughout the week were as follows: 250-300 pounds, $110-$120; 300-350 pounds, $105-$115; 350-400 pounds, $102-$105; 400-500 pounds, $90-$100; 500-550 pounds $85-$95; 550-600 pounds $80-$85; 600-700 pounds $77-$90; 700-800 pounds, $79-$83. Slaughter cows were steady this week. For the week cows brought $37-$42 for boning cows (850-1,200 lbs) and $35-$43 for lean (850-1,200 lbs).

Live Cattle futures moved higher this week, rising early on the strength of last week’s cash trade and generally higher commodity prices. Live Cattle took a big jump on Wednesday as the market took stock of very early cash trade at higher prices. The October contract posted its highest close in over a month on Wednesday before settling back a little lower to finish the week. Live Cattle closing prices on Friday (with the change from last week’s close in parentheses): October $86.40 (+2.48); December $87.43 (+1.68); February $87.78 (+1.45); April $89.50 (+1.10); June $86.40 (+0.85); August $86.30 (+0.45).

Feeder cattle futures didn’t have much luck keeping up with Live Cattle this week. Most contracts posted modest gains early in the week but gave it all back as the week wore on. High and volatile corn prices continue to keep pressure on Feeder Cattle contracts. Feeder Cattle futures closing prices on Friday (with change from last week’s close in parentheses) were as follows: October $94.25 (-0.45); November $95.50 (+0.25); January $95.78 (-0.27); March $96.65 (-0.30); April $97.40 (-0.35).

Corn futures continue to march higher on the combination of uncertain weather and a very late crop. Monday’s Crop Progress report underscored the precarious situation for this year’s crop. Through last weekend, just 17% of the corn crop had been harvested nationally, compared to a 5-year average of 46% harvested by this time in the season. The numbers in key Corn Belt states are even more striking. For example, the Illinois crop is just 11% harvested this year compared to a 5-year average of 68%. Corn also got support from a steadily weakening dollar and (a related issue, of course) steadily higher crude oil prices. Nearby Light Crude Oil futures broke above the $80 mark this week, and talk in the market turned to the question of whether or not oil could top $100. That would be a real boon for ethanol demand – and not much else. On Friday, December corn traded to a 4-month high of $4.23 before retreating to close lower on the day. For the week, though, December corn was sharply higher, closing at $3.96, up 21 cents from last Friday.

Wholesale beef prices continued to advance this week, helping to support the rally in fed cattle prices. For the week, the Choice cutout averaged $137.68, up $2.39 from last week’s average. The Select cutout averaged $133.15 this week, up $2.14 from last week’s average.

Source: John Michael Riley and John D. Anderson, Department of Agricultural Economics, Mississippi State University