Cash fed cattle prices last week were up a couple of dollars per cwt on a live basis as packer buyers searched for enough choice-grading carcasses to fill their orders, a market analyst said.
Feedlot showlists are thinning, especially for the kind of cattle the buyer wants. This is giving the seller more leverage in price negotiations, a situation that looks to increase in coming months or even years.
ON-FEED REPORT NOT BEARISH
October’s Cattle on Feed report from the USDA was pretty much in line with analyst and trader estimates, but it did have something to say about what is to come, said Andrew Griffith, Extension agricultural economist at the University of Tennessee, in a letter to Extension agents.
“The expectation is for the number of cattle on feed to decline given the increased quantity of heifers slaughtered in 2022 and the increase in cow slaughter,” Griffith said. “The increased slaughter of females is certain to result in smaller calf crops the next few years, and that could be extended if significant moisture is not received in drought stressed regions of the country.”
Cows and heifers were being sent to slaughter in greater numbers this year mostly because of the drought, the market analyst said. USDA feeder cattle prices showed gains in most regions of the country over last year in nearly every month, so if they were being sold off the farm or ranch, it wasn’t because of poor market conditions for feeder cattle.
SMALLER CALF CROPS TO COME
Those increased female sales can’t help but result in smaller calf crops over the next couple of years, unless the cows suddenly begin dropping twins, the analyst said.
Griffith said the lower number of females in the herd “is certain to result in smaller calf crops the next few years. And this could be extended if significant moisture is not received in drought-stressed regions of the country, he added.
But just getting more rain in parched areas won’t bring back the forage immediately, the analyst said. It takes grass a while to build itself back up to where it can sustain more than limited grazing pressure.
Cattle growers know this, and won’t subject their grasslands to intense grazing before they’re ready, the analyst said.
Feeder cattle markets last week were influenced by higher futures prices, Griffith said. In some ways, the move was unexpected since prices the previous week gave little hint at last week’s up-move.
Cash and futures feeder cattle prices last week were looking to converge as the Oct contract expired on Thursday.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $151.91 to $153.31 per cwt, compared with last week’s range of $145.28 to $153.00. FOB dressed steers, and heifers went for $237.05 to $237.37 per cwt, versus $228.72 to $239.18.
The USDA choice cutout Monday was up $0.39 per cwt at $263.65 while select was down $0.03 at $234.46. The choice/select spread widened to $29.19 from $28.77 with 87 loads of fabricated product and nine loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were down $0.05 at $2.15 to $2.25 a bushel over the Dec futures and for southwest Kansas were steady at $1.00 over Dec, which settled at $6.91 1/2, up 10 3/4.
Six heifer contracts were retendered for delivery Monday at two.
The CME Feeder Cattle Index for the seven days ended Friday was $177.48 per cwt up $1.63. This compares with Monday’s Nov contract settlement of $177.62, down $0.25.