Compared to last week, feeder cattle sold steady to 1.00 higher with steer and heifer calves selling weak to 3.00 lower. Demand was fairly good for the light  numbers of true yearlings available, but rather light for calves which dominate receipts nationwide. For the first time in recent memory, the fed cattle market  is actually driving feeders. Direct slaughter cattle prices gained another 2.00  this week with Southern Plains sales from 87.00-88.00 and Northern feedlot areas  3.00 higher dressed at 135.00. This marks 6.00-7.00 of market advance in the  last three weeks, just when indicators looked the bleakest for cattle feeders  facing heavy cattle and lackluster beef demand. Nearly 800 loads of CME Live  Cattle deliveries at the northern-most delivery points helped pull the cash  market from a 3.00 discount to an eventual near 6.00 premium after October live  cattle closed limit down on Friday’s final session. This rare positive basis  resulted in a nice bonus for hedged cattle feeders to help reach their break- evens.

This fed cattle rally is currently the only support for feedlot  replacements as grain markets continue higher while farmers struggle to harvest  between rains - and herds of spring-born calves pull on feeder prices. Calves  remain under pressure as the cool and wet conditions that have prevailed this  month continue to cause additional health problems and keep wheat pasture grazing  from realizing its potential. The moisture levels have been more than adequate  for Hard Red Winter Wheat early growth, but the lack of sunshine and warm days  has left pastures too short and too soft for an early turnout. Wet conditions  have also kept farmer feeders out of the market, however damaged high-moisture  corn could bring additional independent feeders into the feeder cattle market  when the combines are finally parked. This week’s reported auction volume  included 36 percent over 600 lbs and 41 percent heifers.

Source: AMS/USDA, Corbitt Wall