US calf and yearling prices are similar to a year ago after rebounding strongly from the dismal prices of October and November last year amid stronger-than-expected fed cattle prices and feedlot profits.
In the Southern Plains, yearling prices (700- to 800-pound steers) averaged below a year earlier during the first three months of 2017 and essentially equal to 2016 for the second quarter, said the Livestock Marketing Information Center in its Livestock Monitor.
For a trend, yearling prices are more similar to the 2011-2015 average, and if they continue along this path, they should flatten with a fall peak.
Calf prices (500- to 600-pound steers) were more than $30.00 per cwt below 2016 in the first quarter of this year but in the second quarter posted a year-over-year decline of only $3.40.
Calf prices also were following the trend of the 2011-2015 average and could flatten into a fall sell-off before setting the annual high in late-fall.
If fed cattle prices remain above a year ago for the balance of 2017, LMIC economists look for that to support calf and yearling prices compared to a year ago, too, especially since prices last year were very depressed.
Nationally, the LMIC is forecasting yearling prices will be at or above a year ago for the balance of 2017. Current quarter (July-September) calf prices are likely to be unchanged to higher, compared with 2016.
In the fourth quarter, Southern Plains calf prices (500- to-600 pound steers) are forecast to be $8.00 to $12.00 per cwt above 2016.
THREE LIKELY MARKET DRIVERS NEXT YEAR
Three usual drivers of calf and yearling prices likely will be at play in 2018, the LMIC says:
1) fed cattle prices;
2) the size of the calf crop; and
3) feedstuff costs.
Larger domestic supplies likely will pressure fed cattle prices compared with this year’s, the economists say. How much prices slip depends mostly on domestic and foreign beef demand.
Currently, the LMIC is forecasting the annual average fed steer price in 2018 will be 2% to 6% below 2017. The 2017, US calf crop was bigger than in 2016, and 2018’s calf crop will almost surely increase again.
Feedlots and backgrounders could face higher feedstuff costs in 2018, which may provide some additional headwind to prices, they say. For planning purposes, feedlots and backgrounders were advised to look for some erosion in calf and yearling prices in 2018 compared with 2017.
CATTLE, BEEF RECAP
Fed cattle sales on the livestock exchange video auction Wednesday averaged $116.00 per cwt, down $1.68 from $117.68 last week. Only one lot of 54 head with one- to nine-day delivery sold.
Cash cattle trading was reported at $116 per cwt on a live basis early but moved up to $118 later where trading appeared to stop. No dressed-basis trades were reported
Cash cattle trading last week was reported at $117 per cwt on a live basis, down from $118.25 to $120.50, mostly $120 the previous week. Dressed-basis trade was at $187 to $188, down $2.
The USDA’s choice cutout Wednesday was down $0.35 per cwt at $205.06, while select was off $0.87 at $197.42. The choice/select spread widened to $7.64 from $7.12 with 112 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday was $150.43 per cwt, down $0.36. This compares with Wednesday’s Aug settlement at $150.25, up $1.07.