Compared to last week, feeder cattle and calves sold weak to 3.00 lower with some mid-to-late week auctions reporting even sharper losses. Direct trade was very light, again this week, with sellers passing bids that were 2.00-3.00 lower than the ones they passed up last week. All classes of cattle and beef markets posted significantly lower prices for the week; with Live and Feeder futures over 3.00 lower, cash fed cattle trading 1.50-2.00 lower, Choice boxed beef cut-out values 3.89 lower, and even the average drop (hide and offal) value fell nearly .50 to 8.35 cwt which is 3.09 lower than the same time a year ago. Plus, yet another dairy buyout program has been announced for this year. Most cattle feeders have now given up on getting the finished market up to 90.00, as all the out-front CME contracts are the low to mid 80.00’s with the exception of December 2010 which is currently trading at 88.50. Feedlot replacement buyers are now determined to buy feeder cattle well below 100.00 and hope they feed for close to .60/lb cost of gain (or better) to try and scratch out a profit. One bright spot for the cattle feeder has been the outstanding performance of cattle over the last several months. Many cattle that were put on feed early in the mild summer and expected to gain a little over 3 lbs/day, actually put on over 4 lbs/day which has caused much of the heavyweight problems in the Northern Plains. The heavy carcasses (over 1000 lbs) that these big cattle are yielding have caused increased pressure to the already pressurized finished market. Many of the typical dressed sales of eastern Nebraska showlists are actually now considered to be negotiated grid pricing as discounts (mostly 15.00-20.00 cwt dressed) are routinely imposed, however some packers are using a 10 percent tolerance of heavyweights as a bargaining tool.

Wheat grazing backgrounders have yet to fully enter the lightweight calf market and farmer feeders remain mostly quiet, as both are pre-occupied with their farming operations. Wheat pastures should be stocked by early November and independent feeders want cattle delivered as soon as the last load of grain is hauled from the field, but both would like to wait until a hard freeze which normally cuts down on sickness problems. Value added calves were a hot commodity in Burwell, NE, last Friday as a 200 head string of 495 lb process verified steers brought 122.00, while their 550-700 lb brothers traded from 113.00-115.50. The top sellers were actually a reputation crop of light red/dark yellow hided calves that were pre-conditioned (which means vaccinations – but unweaned in the upper Midwest). This week’s reported auction volume included 47 percent over 600 lbs and 43 percent heifers.

Source: AMS/USDA, Corbitt Wall