Data from the USDA’s Agricultural Marketing Service are giving few clues about the possible direction of feeder cattle prices in the short term.
Prices for 700- to 800-pound feeder steers in the Plains typically decline into mid- to late February before bottoming for the year. From there, they move unevenly higher into late July or early August.
The 2013-2017 average has feeder steers in the Southern Plains hitting a low of $161.90 per cwt before rising to its annual high of $182.52 in late July or early August.
There are many factors that go into defining a price for feeder steers at any point in the annual cycle, but primary among them in the long term is availability, which may be defined as different than supply. The feeder cattle may be out there, but if the owners aren’t selling for whatever reason, they aren’t available, and prices could rise.
Conversely, the national supply of feeder cattle may be in tight supply historically, but if weather or economic conditions force them to market, availability increases.
REGIONAL VS NATIONAL PRICE DIFFERENCES
However, regional market differences can occur, making a producer’s marketing decisions more precise than just following the national average.
Agricultural Economist Andrew Griffith, of the University of Tennessee, said in his weekly newsletter last week that feeder cattle prices in his state were unevenly steady, held up by a reduction in receipts at the livestock auctions. He blamed muddy pasture conditions for much of the shortfall as a loaded truck might be difficult to get out of a muddy pasture.
In Tennessee, as in many parts of the US, many cow/calf producers will hold calves they didn’t sell early in the fall until January. This moves the income into the next year’s taxes and to capitalize on a localized, annual price increase as farmers keep calves at home until after the new year.
But that’s not the case nationally. The five-year average of feeder cattle prices in the Southern Plains shows a January-February seasonal decline.
It doesn’t always work out that way, though. Last year, Southern Plains feeder cattle prices dipped the first two weeks of January before climbing again to a mid-February high. Prices then slipped to hit the annual low of $136.68 about the third week of May.
In all cases, though, weekly average prices for feeder cattle in the Southern Plains were below the 2013-2017 average. If feeder cattle prices continue the trend, they will be lower than their 2018 counterparts all year.
But feeder cattle demand could be suffering right now, too. Feedlots are said to be muddy unless frozen stiff by cold, winter temperatures, and feedlot managers may be reluctant to restock.
Time will tell.
CATTLE, BEEF RECAP
No fed cattle sold on the Fed Cattle Video Exchange Wednesday. Sixty-three head traded last week at $123 per cwt on a live basis.
Cash cattle traded last week at $122 to $123 per cwt on a live basis, down $2 from the previous week and at $197 on a dressed basis, steady to up $1.
The USDA choice cutout Thursday was down $2.66 per cwt at $215.39, while select was down $0.12 at $212.88. The choice/select spread narrowed to $2.51 from $5.05 with 103 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday, was $142.57 per cwt, down $0.42. This compares with Thursday’s Jan settlement of $142.10, down $0.27, and the Mar contract settlement of $142.55, down $1.75.