With a little help from Midwest weather conditions through harvest, US cattle feeders could see their way clear to continue paying up for feeder cattle.
Affordable feed prices have been acclaimed as the basis for strong feeder cattle prices this year in spite of increased supplies from a larger total US cattle herd. Economists and analysts also have predicted relatively low US corn prices into next year.
The USDA’s August Crop Production report told of larger-than-expected 2018 corn and soybean crops, which could pressure feed prices and be the expected boon to cattle feeders, a market analyst said.
There is a problem, though, in that low corn prices also help hog and chicken producers. And it could be said that it will help chicken producers more, which could be an issue since chickens use corn much more efficiently than cattle.
SUPPORT BEGAN LAST YEAR
Support for feeder cattle actually started early last year with a weekly average price of $128.22 per cwt in the first week of February, according to the AMS data. Through the year, yearling prices continued to narrow the gap with the 2012-16 average.
This year, growing supplies of feeder cattle, and expectations for more to come after a growing calf crop, pressured prices early into a low or $136.68 per cwt in the third week of April. Since then, prices have climbed more or less steadily as crop prospects rose, and futures prices for the feed grain slid.
OLD-CROP CORN SALES RISING
At this time of year, old-crop corn sales increase as farmers holding some of last year’s crop clean out their bins in anticipation of the new crop. Market analysts report that this year is no exception, saying country movement of old-crop corn has increased over the last month.
That likely will continue into September when most producers will be hitting the fields with their combines.
Old-crop ending stocks estimates from the August USDA report said. This was unchanged from the July estimate as were USDA estimates of corn consumption during the 2017-18 marketing year, which ends Aug. 31.
US corn exports continue to show strength, and may exceed the current forecast of 2.4 billion bushels, which may affect feedlot feed costs by providing some extra competition for available supplies.
Feed and residual use totals remain uncertain since there is no actual measurement of this category. The USDA takes production totals and subtracts exports and commercial use, both of which are measured and known, to come up with its total of feed and residual use.
As always, time will tell.
CATTLE, BEEF RECAP
A few cash cattle trades were reported this week at $109.50 per cwt on a live basis, down $0.50 to $1.50 from last week’s $110 to mostly $111. Dressed-basis sales last week were $175 to $179.
No fed cattle sales were reported Wednesday on the Livestock Exchange Video Auction. Two weeks earlier, 851 head sold at an average price of $110.07 per cwt, down from the last sale at $112 two weeks previous.
The USDA choice cutout Wednesday was up $0.31 per cwt at $209.95, while select was down $0.66 at $200.61. The choice/select spread widened to $9.34 from $8.37 with 110 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $150.34 per cwt, down $0.30. This compares with Wednesday’s Aug settlement of $149.05, up $0.12.