Feeder cattle prices at auction are stabilizing in all major sectors of the country and in all weight ranges as the markets emulate either last year’s moves or the 2010-14 average.
A compilation and analysis of USDA Agricultural Marketing Service data by the Livestock Marketing Information Center shows year-to-date price movements in their own narrow range and implying somewhat seasonal action ahead.
That would go against market predictions of larger supplies and softening prices as the year progresses, implying that feeder cattle prices will follow last year’s trend, although at a lower level.
A graph of 700- to 800-pound feeder steers in the Southern Plains illustrates the point. Average prices started the year with a weekly average of $168.27 per cwt, dropped to $160.42 and then to $144.44 before bouncing to $158.94 and then to $160.48. In doing so, it followed last year’s trend.
If the Southern Plains feeder cattle market were to follow the five-year average from this point on, prices would rise gradually through the year. But the 2010-2014 average is for a period of shrinking supplies as a long-term drought parched pastures, and rising prices for feeder cattle diverted heifers to slaughter.
LAST YEAR’S TREND MORE LIKELY
Additionally, the US herd is still growing, according to USDA data. Feeder cattle auction numbers anecdotally are rising slowly year-over-year, confirming the government data.
Most of those extra feeder cattle will come to market in the summer and fall months as various grass types in major pasture areas give out seasonally. As a result, feeder cattle prices are expected to follow last year’s trend but continue the wide discount.
Currently, that discount amounts to $47.89, or $22.98 in the Southern Plains. In Georgia, the discount is $50.71, or 26.6%%, and in Billings, Mon., it is $48.53, or 23.4%.
Graphs of all major feeder cattle areas show a similar trend for last year – a slow, uneven rise in prices into late June and then a faster, uneven decline into the end of the year.
Futures prices also show expectations of more calves and lower prices by fall. Closing prices Wednesday ranged from $151.05 per cwt to $151.72 through the Aug delivery month. After that, prices for each successive delivery month decline through Jan’17 which was pegged Wednesday at $137.90.
CASH CATTLE LOWER
Cash fed cattle markets this week are working lower. The USDA report on five-area prices combined with information from private sources shows cattle trading from $131 per cwt up to $134 on a live basis and lightly at $206 on a dressed basis.
Last week, cattle traded from $130 up to mostly $136 live and $210 to $216.50 on a dressed basis.
Bids from packer buyers were said to have risen to $134 after $132 bids were rebuffed by sellers asking $138. Dressed-basis asking prices were reported around $215.
The USDA reported slightly higher wholesale beef prices Wednesday, with choice up $0.16 per cwt at $218.19, and select up $0.02 at $213.62. The choice/select spread widened to $4.57 from $4.43, and there were 103 loads of fabricated product sold into the spot market.
The USDA said loins, rounds and ribs were steady to firm while chucks were lower. Trimmings were weak on light demand and offerings.
The CME Feeder Cattle Index for the seven days ended Tuesday was $159.49 per cwt, down $0.27. This compares with Mar’s Wednesday settlement of $151.22, up $2.22.