Caution Urged As Feeder Cattle Come Off Highs

Feeder cattle prices have come off their record highs in a seasonal dip, inviting purchase from cattle feeders who hope to profit from their resale as fat cattle in coming months.  There are times when such investments yield a prospective profit, but such is not always the case, and buyers need to be careful.

Feeder steers weighing over 800 pounds at the Oklahoma City Stockyards Monday were steady to $2.00 per cwt higher, while feeder heifers were steady to $5.00 lower.  Steer and heifer calves were mostly steady to $5.00 higher, although comparable sales from a week earlier were limited.  Demand was said to be good on moderate-to-active trading.

Medium and large No. 1 feeder steer yearlings weighing 700 to 750 pounds sold at $236.00 to $240.00 per cwt.  Unless these calves gain at an unusually fast pace or fit into some type of premium program, they likely will be money losers if the April futures contract is any indication of the final cash price.  A quick calculation says they could lose $9.83 per cwt, or about $128 a head.

Medium and large No. 1 feeder heifers weighing 700 to 750 pounds sold at $221.00 to $230.00 per cwt.  These cattle could lose $8.83 per cwt, or about $115 a head.




The Hanford, CA, Overland Stock Yard held its video auction for Holstein steers and heifers Thursday, and some of these calves have a better chance of panning out for their buyers.  However, not all of them will pan out.

March-delivered 325-pound California Holstein steer calves sold at $314.50 per cwt, and delivered to a southwest Kansas feedlot might show a $99-per-head profit.  Yet some February-delivered 450-pound Idaho calves might produce a $180-per-head loss.




The CME Feeder Cattle Index for the seven days ended Wednesday was $239.30 per cwt, up $0.47 from Tuesday.  Feeder cattle futures settled higher but remained within a sideways-to-weaker channel.

A chart of last year’s weekly prices for Southern Plains 700- to 800-pound medium and large No. 1 feeder steers shows a flat to slightly weaker trend for the last two months of the year.  The flattening futures market may be reflecting this trend again this year.

Feeders are vexed by the often unprofitable prospects of placing these cattle on feed versus current tight supplies and the prospect of leaving feedlot pens empty.

To make matters worse for those contemplating putting cattle on feed, market sources expect feeder cattle prices to recover from the current seasonal slump and set new highs in coming months.

Many of those same sources, however, expect fed cattle prices to show more restraint through the winter.  The $170-per-cwt level seems to be a hurdle the market must jump as futures and cash prices seem to stall there in the last two weeks.




No Plains area cash cattle trade was reported through Thursday with scant bids of $165 to $167 on a live basis with asking prices of $172 to $173.  Cattle traded last week up $6 to $7 at mostly $170 live and $265 on a dressed basis.  Sources think this week’s trade will be about steady as buyers and sellers square off over price and profitability.

USDA’s wholesale prices for beef dipped slightly Thursday after being up all week.  The choice cutout was down $0.28 per cwt to $253.35 while select was off $0.36 to $239.41.  There were 101 loads of fabricated product sold into the spot market.