Compared to last week, yearling feeder cattle sold steady to 3.00 higher while calves traded on a lighter test traded steady to 5.00 higher. Several auctions on yearling feeders noted full advance on the heifers. Direct trade was fully steady with last week. Yearling demand continues to be best in the high corn production areas especially in the North Central States as farmer feeders are also engaged in purchasing yearlings to feed. Last Friday packers bid aggressively on tight fed cattle supplies ranging from 150.00-153.00 for live prices.
Signs of beef demand improving with seasonal strength has packers selling product higher and managing their kill levels has them operating more positive to the black. Choice boxed-beef levels had felt a bit sluggish before closing 1.15 higher last Friday, which seemed to put a fire on the grill this week for cut-outs. Choice Boxed-beef gained 8.75 for the week at the close on Thursday; then closed .37 cents lower on Friday at 244.72 for Choice product. at the close of Thursday.
This week saw some wild shifts in the commodity markets starting with the USDA Crop Report on Wednesday. USDA’s Crop Report on Wednesday saw larger than expected corn and soybean estimates than trade expected. Corn production came in at 13.69 bb up from 13.5 bb forecast last month and above most analysts’ estimates of 13.3 bb. The average yield was predicted at 168.8 bpa, 2 bushels per acre higher than earlier forecast and about 4 bpa higher than estimates. Corn ending stocks came in at 1.7 bb for 2015-16 crop up 114 mb from last month. This had September and December corn dropping 33 cents over Tuesday and Wednesday. This should be welcome news for livestock producers as feed cost should remain relatively low and support expansion in beef, pork and poultry.
The protein pipeline is putting out a good amount of product from all three species involved. There have been some significant challenges over the last several months and of late as on Tuesday China devalued their currency over slumping economy in the world’s second largest economy. This sent the Dow in a sell-off mood on Tuesday along with wide spread commodity pressure as other world countries feeling it could get harder to sell their goods and products to China.
A continuing strong dollar relative to other currencies has other countries buying less as it puts a decline in their purchasing power. Increasing production and competition from pork and poultry may have some challenges for beef domestically and abroad. The markets seem to be trying to decide if it’s bearish or bullish as both sides are looking at facts and figures; which can make it a roller coaster ride. This also keeps frames of minds, attitudes and positions changing fast and in a hurry.
Live Cattle contracts seem to keep eyes on boxed-beef trade and bearish outside markets. Feeder Cattle contracts want to anticipate better news especially in the fed cattle market but seem skeptical to participate. On Wednesday Feeder cattle futures had gains of near 2.50 with sharply lower corn contracts, but live cattle contracts eroded with sharp losses and support for feeders quickly faded and were unable to hold strong midday gains. But feeder cattle prices this week and last week reported through the auctions and video sales are much more resilient than the cattle futures.
Western Video held a two day auction this week on Monday and Tuesday selling over 42,000 head of top quality feeders with 69 percent of the consignments coming from the North Central states. Some highlights included 950 head yearling steers averaging 970 lbs sold for a weighted average price of 213.40 for current delivery and 680 head of steer calves weighing 420 lbs sold for 345.00 for October delivery. At the Hub City Livestock auction in Aberdeen, SD on Wednesday sold two pot loads of yearling steers averaging 865 lbs sold for a weighted average price of 218.99. Auction volume included 53 percent weighing over 600 lbs and 36 percent heifers.