Amid continued tight supplies and strong demand, feeder cattle prices remain at historically high levels in many parts of the country, especially those near pasture. What’s more, market analysts say these prices likely will remain high into next year.
This year is a transition year, one where ranchers and farmers change from continually whittling their herds to actively building the herd.
For years, drought and the cattle market conspired to make it either impossible to feed all the cattle they had or to make it economically unwise to keep heifers for breeding rather than to sell them for fattening in the feedlots.
But once rain returned to the traditional pasture areas of the Plains, Southeast and Midwest, more cow/calf producers began to keep a heifer or two for breeding, believing that the investment in time, feed and calf price was working in favor of herd expansion.
But, as thousands of heifers are no longer going into the feedlots, feeder cattle availability tightens, and prices go up. This is good for the cow/calf producer and reinforces his idea that the market says it wants more calves for the feedlots.
However, that’s bad for cattle feeders. It means they have to pay more for young cattle to fatten into slaughter cattle.
RECORD HIGH PRICES TO CONTINUE
The record high prices being reported for steer calves, feeder steers likely will continue into next year when more yearlings hit the market from the heifer and cow retentions at the producer level. It takes a year and a half from the decision to retain heifers for breeding until calves are ready for sale to the feedlots.
The first of those calves may be coming to market now, but the trickle may not be noticeable. Calves that might have seen an auction ring by the third quarter the last few years because of scarce green grass now are being kept on rain-renewed pastures because grazing weight gains are much cheaper than feedlot gains.
That means the flow of feeder cattle to market isn’t likely to pick up until the grass dies or goes dormant seasonally. Calves also will come into the feedlots when they are nearer their desired slaughter weight and just need some finishing fat.
Currently, grass is abundant, and landowners without cattle are seeking cattle to graze their pastures. There is little incentive from a forage standpoint to put young calves on grain-based diets in the feedlots.
Feed costs are going down, but ironically these lower feed costs are encouraging feeders to bid up feeder cattle prices. It won’t be until availability improves or cattle feeder equity runs low that calf prices will decline appreciably.
CASH FED CATTLE MARKETS STEADY-$2 LOWER
Cash cattle markets Monday were quiet with no bids reported from packer buyers. Asking prices also were scarce but were expected to surface at around $155 per cwt on a live basis and $250 on a dressed basis.
Estimated feedlot showlists were higher in many parts of the Plains states feeding areas, which could prove problematic for feeders trying to get cattle prices higher and minimize hefty losses.
Slaughter cattle prices last week were steady to $3 lower at $152 to mostly $155 per cwt on a live basis and at $243 to $245 on a dressed basis.
Beef prices Monday were up after being mixed mid-morning. The USDA choice cutout was $247.33 per cwt, up $1.61, and the select cutout at $240.46, up $0.04. Volume was light with 73 fabricated loads sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Friday was $225.86 per cwt, up $0.46.