Fed cattle appear to be backing up in the feedlots. While packers paid nearly steady prices this week, they did so on very light volume, and carcass weights continue to rise.
Cattle traded lightly in the Southern Plains Wednesday at a steady $172 to $173 per cwt on a live basis. On a dressed basis, cattle traded at $267 per cwt in Nebraska, steady to $1 lower.
Federally inspected steer carcass weights were up a pound last week to a record-high 903 pounds as sellers held cattle on pasture and then on feed longer to get more for each animal sold and to delay repurchasing expensive feeder cattle.
The latest carcass weight of 903 pounds is 26 pounds, or 2.96%, above the 877 pounds of a year earlier. It also is 44 pounds, or 5.12%, above the previous five-year average.
Carcass weights followed the year-earlier trend through the first weeks of July but began to diverge in mid-summer when it became more apparent that US corn supplies would be record high, and feed prices fell. Further declines in feed costs along with record-high prices for feeder cattle encouraged cattle owners to grow them larger before selling to the packers.
That trend appears to be in place currently, and while it’s working in the feeder’s favor now, it could come back to bite them later.
CATTLE FUTURES SHOW POSSIBLE TOPPING SIGNS
Dec14 live cattle futures topped out on Monday at a record $161.60 per cwt, although this was a spike run to the new high on a volatile Monday. A more sedate high of $171.30 was achieved the previous Monday, Dec. 17.
The contract also may want to fill the gap left on daily charts Nov. 26, which won’t be filled until the contract trades at $168.
The April contract topped out at $171.00 on Friday and closed Wednesday at $168.30, even though cash cattle were trading at record highs again in the Southern Plains. This contract has received some technical support from the 18-day moving average, but Wednesday’s close was right on the line.
It appears that futures traders are becoming increasingly skittish about the ability of a post-holiday market to sustain the 3 ½-month rally.
BEEF PRICES NEAR STEADY
Weekly wholesale beef prices are holding in a narrow, sideways pattern, with the USDA’s choice cutout value last week at $250.81 per cwt. The range goes from about $238.12 set the first week of October to $251.78 set the first week of November.
A chart of the average choice cutout price shows a bump next week, although last year’s post-Thanksgiving day hump occurred the following week.
The USDA’s boxed beef prices were up amid moderate demand and light packer offerings. Ribs and loins remained firm, but end cuts were weaker. Sources say they expect this trend to change in coming weeks as consumers shift back to the more mundane chuck and round roasts through the winter.
The USDA’s choice cutout value Wednesday was $257.13 per cwt, up $0.26 from Tuesday and up $2.34, or 0.92%, from the previous week. The select cutout was reported at $244.00 per cwt, up $0.33 on the day and $1.95, or 0.81%, above a week earlier.
Feeder cattle futures are technically weak for the time being, having broken through various chart support points, sources said. The market’s inability to hold Monday’s rally along with Tuesday’s gap lower and Wednesday’s feeble attempt to fill the gap leave the market vulnerable to further declines.
The CME Feeder Cattle Index was $240.72, up $0.03 from the previous day, while the Jan contract settled Wednesday at $230.50.