In general, feeder cattle prices are following the cash live cattle market higher but remain on an overall downtrend. Regional differences are evident, but data show a buyer preference for heavier calves continues as well.
Prices for slaughter steers in the Southern Plains have risen sharply over the last three weeks after bottoming at an average of $120.14 per cwt the last week of September. The general feeling among cattle traders is that this seasonal demand bounce in fed cattle prices was overdue and likely won’t last much longer.
Last week’s fed cattle price gains were less dramatic than the previous two weeks but still showed impressive strength when plotted on a graph. The latest rally also may be running out of steam.
FEEDERS FOLLOW WITH LESS STRENGTH
Weekly Southern Plains prices for feeder steers also show gains over the last three weeks, but with less strength. This Livestock Marketing Information Center graph shows an average price for 700- to 800-pound No. 1 feeder steers.
Compared with a graph of fed steer prices, gains over the last three weeks are less exciting unless they are taken as a whole. The graph shows a tendency for prices to advance through the end of the year.
That graphed seasonal tendency of prices for these large feeder cattle to continue rising will continue into next year when 2014 prices are incorporated into the five-year average and 2009 values drop out.
However, since the cattle cycle is longer than five years, drawing conclusions from the average may be misleading in this case. USDA data on cattle inventories shows an expanding calf crop that is already credited with turning this year’s heavy calf prices into a downward slope.
That downward slope for feeder cattle prices is more evident in the data for 400- to 500-pound feeders where prices have declined since June. Prices for these lighter feeder cattle showed a tendency in the 2009-2013 period to rise in the third quarter, but this year likely will be different.
As with the heavier feeders, the numbers of those lighter-weight animals is rising with a growing cow herd. As a result, fourth-quarter price trends this year may appear counter-seasonal when in reality they are in line with the longer-term cattle cycle, which is much longer.
Regional differences will still exist (Georgia prices have been particularly weak lately), but the general trend in feeder cattle prices appears to be headed lower over the long haul.
CASH FED CATTLE MARKETS QUIET
Cash fed cattle markets in the Plains Monday were quiet. Cattle traded last week at $136 to mostly $138 per cwt on a live basis and $205 to $207 dressed, both steady to up $3 from the previous week.
Wholesale beef prices Monday were lower, with the USDA choice cutout value at $217.06 per cwt, down $0.11 on the day, and its select cutout at $209.69, off $1.21.
The choice/select spread widened to $7.37 from $6.27 on Friday, and there were 83 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Friday was $193.68, up $0.88. This compares with the Oct settlement Monday of $193.67, down $1.37.