The calf and feeder cattle markets are a tale of two markets, according to University of Tennessee Extension Agricultural Economist Andrew Griffith.
Writing in the weekly “Tennessee Market Highlights,” Griffith said the story of calf and feeder cattle markets really are two separate affairs – futures and cash.
FEEDER CATTLE FUTURES VOLATILE
The futures market is where much of the uncertainty and volatility has been seen the last few weeks, he said.
Take the Mar feeder cattle market as an example.
The feeder cattle futures market closed $2.48 per cwt lower on Jan. 25 than on Jan. 24 before it closed $2.80 higher the next day. The market had a $5.30 trading range over those three days but had only a $0.32 net increase from Wednesday’s close to Friday’s close.
In a similar vein, Mar feeder cattle futures on Jan. 31 dropped $2.13 from the previous day before rocketing to the daily limit of $4.50 per cwt the following day. Friday saw Mar feeders rise $1.38.
CASH FEEDER MARKETS DIFFERENT
Local auction markets have been a different story, Griffith said, but they should ease some of the angst for those looking to market cattle in the near term.
Cash feeder cattle markets have shown much less volatility with prices seen much more stable as stocker operators and feedlot managers continued to be active participants in the calf and feeder cattle markets.
AMS data show Southern Plains feeder cattle prices in January holding between last year and the 2012-2016 average consistently.
Most of the interest lately in the southern states were for the lighter calves that can go on pastures that will green up soon, Griffith said.
OUTLOOK
The feeder cattle market remains strong and should continue to remain strong in coming months, Griffith said. The latest USDA Cattle on Feed report once again demonstrated large placements of lighter-weight cattle.
Placements of feeder cattle into feedlots the last four months of last year were 9.7% or 747,000 head, higher than the same months in 2016. Placements of cattle weighing less than 700 pounds over this period were up 11.9%, or 430,000 head.
The increase in placements of lighter weight cattle likely means there will not be as many coming off winter annuals in the March-through-May time period, Griffith said.
The increased placements of lighter-weight cattle likely will increase beef production slightly earlier than normal this year, he said, but it should offer opportunities for feeder cattle being marketed in the spring months as there will not be as many available as once was expected.
CATTLE, BEEF RECAP
Cash cattle sold last week in the Plains at $126 per cwt on a live basis, steady to down $1 from the bulk of the previous week’s transactions. On a dressed basis, cattle sold steady at $200.
No cattle were sold Wednesday on the Livestock Exchange video auction.
The USDA’s choice cutout Monday was up $0.33 per cwt at $209.43, while select was up $0.71 at $204.16. The choice/select spread narrowed to $5.27 from $5.65 with only 62 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Friday, was $148.12 per cwt, up $0.09. This compares with Monday’s Mar settlement of $149.67, down $1.25.