Given the larger size of the US cattle herd this year, the strength of feeder cattle prices is somewhat of a surprise to many, but Agricultural Economist Stephen Koontz said it’s all because of abundant feedstuffs.
Koontz, from Colorado State University, wrote in this week’s “In the Cattle Markets” for the Livestock Marketing Information Center, that largely good corn crop conditions and weaker prices brought on the support to feeder prices.
And since corn futures reached contract lows Wednesday, one analyst said it seems reasonable to assume feeder cattle prices will remain supported for at least the next few weeks. The latest pressure to corn prices was political as the Trump Administration said it was implementing more import tariffs on Chinese goods, with China responding in kind.
Data clearly show a rise in Southern Plains feeder steer prices after hitting the 2018 low about the third week of May. Prices faded a bit the last two weeks but with the new rounds of trade tensions hitting grain markets, renewed support could be forthcoming, the analyst said.
The weakening feed market has translated into strengthening calf prices relative to the fed cattle and beef markets, Koontz said. The overall protein market outlook is much the same as the beginning of summer – there is a lot of protein to come to market through the summer and fall, and there is no end to the potential trade gymnastics.
However, the calf market outlook is holding strong largely because of cheapening feed, he said.
USDA REPORTS INDICATE GOOD SUPPLIES
Friday’s USDA-National Agricultural Statistics Service Acreage report showed 89.1 million acres of corn planted and 89.6 million acres of soybeans. The corn acreage is up from the 88.0 million acres of intentions from the March Prospective Plantings report, Koontz said.
April’s record cold transitioned into a record-warm May for most of the upper Midwest, and the slow start to planting gave way to finishing on schedule, he said. Crop conditions since then have been good to excellent for the most part.
Corn futures prices have decreased almost $1 a bushel and cow-quality hay clearly is abundant, Koontz said. The only places without much pasture are south and west of southwestern Kansas.
CAUTION WARRANTED
However, longer-term caution still is warranted, Koontz said. Cattle on feed, slaughter weights and competing meat volumes remain substantial.
Feedlots could be filling the pipeline early, but there are abundant feedstuffs for now.
CATTLE, BEEF RECAP
No cattle traded on the Livestock Exchange Video Auction Wednesday. Fed cattle sold two weeks previous at $106 per cwt, down $4 from the prior Wednesday.
Cash trade was reported in Iowa at $175 per cwt on a dressed basis, steady to up $2 from last week.
Cash trade was reported Friday at $112 to $114 per cwt on a live basis, up about $6 from the previous week. Dressed-basis sales in the Plains last week were mostly $173 to $175 per cwt, up about $5.
The USDA choice cutout Wednesday was up $0.12 per cwt at $207.44, while select was off $1.25 at $197.14. The choice/select spread widened to $10.30 from $8.93 with 88 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday, was $145.08 per cwt, down $1.67. This compares with Wednesday’s Aug settlement of $149.40, down $2.45.