Feeder cattle and cow/calf prices have remained unseasonably strong this October, due mostly to strong demand through the entire cattle complex, fueled by declining corn prices.
Feeder cattle futures have traded fairly steady the last four weeks which has continued to support calf prices, said University of Tennessee Extension Economist Andrew Griffith in his weekly Tennessee Market Highlights.
Generally, feeder cattle futures soften through October and November which puts pressure on cash calf prices, Griffith said. The tendency of softer prices is not only a factor of feeder cattle futures moving lower but an increased supply of freshly weaned calves.
The 2011-2015 average of Southern Plains prices for those 700- to 800-pound feeder steers shows the fall decline beginning the third week of October and continuing through the third week of December. On average, this decline amounts to about 6.21%.
Last year, the fall decline in Southern Plains prices for feeder steers began the third week of August but bottomed the third week of October. Another challenge to the October low came in the second week of November but was never able to take prices any lower.
This year, weekly Southern Plains feeder steer prices registered their annual peak the second week of October but dropped sharply in the third.
BLAME IT ON THE GRASS
Though producers have slowly begun bringing calves to market in October, many continue to keep calves at home due to good forage availability made possible by summer rains, Griffith said.
As the fall months progress and as winter nears, more calves will make their way to auction markets. The one difference buyers can expect is for calves to be coming to market a little heavier than in previous years, he said.
For cow/calf producers, the market continues to support putting weight on calves, Griffith said. If putting additional weight on calves is not an option, then the current calf market is offering opportunities to market at profitable levels.
For stocker producers, prices this fall are much higher than one year ago. However, he said the market is offering profits through hedging opportunities which may be beneficial if the producer does not want to assume all of the price risk.
MOVING FORWARD
Moving forward, producers should expect slightly softer calf prices moving through November, but the risk of a major price collapse is small, Griffith said.
In other words, last week’s price drop may not be repeated.
Prices on slaughter cows remain relatively strong, but they are expected to soften moving through the next several weeks, he said. Overall, prices are supportive of a profitable enterprise.
CATTLE, BEEF RECAP
No fed cattle sales were reported from the Livestock Exchange video auction Wednesday. Last week, light sales were reported at $109 per cwt on a live basis.
Cash cattle traded last week at $110 to $112 per cwt on a live basis, moving from $110 on Wednesday to $112 on Friday. On a dressed basis, cattle traded at $174 to $175.
The USDA’s choice cutout Wednesday was up $0.08 per cwt at $200.21, while select was off $0.30 at $192.39. The choice/select spread widened to $7.82 from $7.44 with 113 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday was $154.58 per cwt, down $0.01. This compares with Wednesday’s Oct settlement of $154.85, down $0.27 and with the Nov settlement of $156.17, up $0.05.