Cash feeder cattle prices appear to be on a weaker path even though hot summer temperatures curtail receipts at many locations.
The CME Feeder Cattle Index for the seven days ended Wednesday was $216.81 per cwt, down $0.33 from $217.14 on Tuesday. It also is down from $222.92 a week ago.
On a weekly basis, 700- to 800-pound steers in the Southern Plains are ready to cross below last year’s price line.
The futures market believes in lower prices to come. The nearby Aug contract settled Thursday at $209.72 per cwt, a $7.09, or 3.27%, discount to the CME Index by which the contract is settled.
Many cattle producers and feeders don’t like to move calves in the heat of summer because of the stress it puts on them. Cattle sweat poorly and the stress of being moved around often is avoided if possible.
But slower summer movement makes futures traders believe more calves will be coming to market in late summer and fall as temperatures cool and grass goes dormant seasonally.
CORN PRICES DOWN
The leaking feeder cattle price structure flies in the face of lower corn prices, too. The CME Sep futures contract has fallen sharply since peaking at $4.43 ¼ a bushel on July 14 to Thursday’s low of $3.98 1/2.
Lower corn prices often support feeder cattle futures as traders reason that lower feed costs will mean feed yards can afford to pay more for the younger cattle they will finish into fed cattle. But cattle feeders continue to lose money on every animal fed, and the pain is mounting after months of red ink.
The Sterling Beef Profit Tracker estimates unhedged cattle feeders are losing $105.75 a head, and while this is slightly better than last week’s $108.70 losses and more than 100% better than the $256.83 losses of a month ago, it’s still a hefty loss, and many potential buyers are holding back to await better estimated breakevens.
LOWER PLACEMENTS SEEN IN ON-FEED REPORT
The USDA is scheduled to release its monthly Cattle-on-Feed report today at 3:00 pm ET, and pre-release estimates show that, on average, market analysts expect feedlots to have placed just 0.4% fewer calves on feed in June than they did a year ago. However, the range of estimates is very wide with some expecting a decline of 6.8% and others seeing a gain of 6.3%.
Cash demand for yearling calves to place on feed remains good, the USDA reported, and demand for these feedlot-bound calves remains strong. This shows that current margin structures still favor placing heavy calves and feeding to larger-than-normal weights.
CASH CATTLE MARKET TRADE LIGHTLY
Cash fed cattle markets Thursday traded lightly at lower prices. The USDA’s five-area weekly accumulated weighted average steer price this week was $146.41 per cwt on a live basis, and the heifer price was $147.00.
Private sources indicated prices of $145 per cwt live, down $3 from last week and $230 to $232 dressed, down about $4. Reported volumes were larger than USDA, indicating these sales took place after USDA statisticians stopped gathering information for the day.
The USDA’s beef cutout value Thursday was lower, with the choice product at $232.59 per cwt, down $0.33 and select at $227.96, off $0.39.