Cash Cattle Markets May Be Setting Itself Up For Support

Cash cattle markets could be in store for some short-term price support.

It appears Kansas feed yards are getting caught up on their marketings, and by extension it’s reasonable to think other Plains States feedlots are reaching the same level of currentness.  If slaughter-ready supplies are tightening, prices could have a temporary floor built under them, and there may even be a rally.

A monthly Kansas State University survey of representative feedlots and then extrapolated to estimate total Kansas feedlot developments found that the number of head per feedlot sold to packers in April declined from the March high.  April average feedlot sales amounted to 5,363 head, down 258, or 4.59%, from March’s 5,621.

A Livestock Marketing Information Center graph of the KSU findings shows the sharp increase in sales in March, up 2,039, or 56.9%, from February’s 3,582.

 

MARKETINGS ABOVE LAST YEAR, FIVE-YEAR AVERAGE

 

Kansas feedlot marketings have been above last year and the 2010-2014 average all year, and with the rising population of US cattle, they may stay above these markers for the rest of the year.  April marketings were 1,527 head, or 39.8%, above April 2015’s 3,836 and 2,570, or 92.0%, above the five-year average of 2,793.

However, the sharp one-month gain in individual feedlot sales shows a decided change in attitude among cattle feeders.  Where they had been holding cattle on feed for as long as possible to get the most money per head so as to minimize losses, they suddenly shifted to selling as aggressively as possible.

Futures market prices inverted to being higher in deferred delivery months and lower in nearby months to being higher in nearby months and lower in deferred months.  This told cattle feeders that cash prices likely would decline in coming months, making it less reasonable to hold cattle for higher prices.

Feeding costs for cattle sold to packers in April remained well below last year and the previous five-year average.  KSU data showed costs per hundredweight of gain at $0.8165, down $0.057, or 6.53%, from $0.8735 a year ago and down $0.1882, or 18.7%, from the average of $1.0047.

 

FINAL WEIGHTS DOWN

 

Another indicator that Kansas feedlots were cleaning up their showlists was declining weights of cattle sold to packers.  In April, fed steer weights averaged 1,388 pounds, down 42, or 2.94%, from 1,430 in March.

However, marketed weights remained above a year ago and the average; they were up 13 pounds, or 0.95%, from 1,375 a year ago and up 79.6 pounds, or 6.08%, from the average of 1,308.4

 

CASH CATTLE MARKET QUIET

 

Packer buyers Wednesday remained aloof to feedlot offerings at $130 per cwt on a live basis.  Dressed-basis markets were even more undefined with no reportable bids or offers.

Sales last week were thin, leaving feedlot showlists generally larger, especially in Texas.  Prices last week were $6 per cwt lower at $125 to $125.50.  A few trades were reported in dressed markets at $204, steady to $2 lower.

The USDA’s choice cutout Wednesday was $1.01 per cwt higher at $222.35 per cwt, while select was off $0.20 at $201.17.  The choice/select spread widened to $21.18 from $19.97 with 113 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was $143.93 per cwt, up $0.18.  This compares with the Aug settlement Wednesday of $146.42, down $0.67.