Starting today, this newsletter will use cattle prices from new USDA cattle market reports to give readers a better idea of what is being done in the cash cattle world.
Pressure from President Joe Biden on the USDA resulted in the new reports listing formula prices and volumes for different categories of live cattle using mandatory pricing data.
Producers had trouble figuring what their cattle were worth since they had no idea what sellers using any form of contractual agreement were getting. And the USDA had trouble divulging all of the information they had while still protecting the privacy of those involved.
THE NEW REPORTS
It still isn’t clear just how this newsletter will publish some of the information in the reports since this week is the first anyone has seen any of them, but the volumes reported are hard to ignore. There are two versions of the reports: daily and weekly, and each deals with the previous day’s or week’s transactions.
The first weekly report, called the National Weekly Direct Beef Type Price Distribution, was issued Tuesday offering side-by-side comparisons of negotiated, formula net, forward contract net and negotiated grid net prices. It then has volumes traded in $2 increments above and below the average base in each category.
So, if a feeder negotiated a price last week of the average base at $123.97 per cwt and sees this report, he/she knows that 513 head sold for $8 more than the average. They also would see that 14,496 traded for $4 less than the average.
But the daily reports have more information than the industry is used to seeing. Called the National Daily Direct Slaughter Cattle — Formula Base Purchases – Summary, it provides greater information into the foundational prices used in cattle market formulas, grids and contracts.
WHAT THEY DON’T SAY
What the new reports don’t show is what some in the industry have been crying for – just what the contracts and formulas are based on.
Many formula contracts historically are based on the previous week’s highest negotiated price, and it’s a fair bet that many still are, a market analyst said.
However, as smaller and smaller percentage of the weekly cattle markets are negotiated weekly, there is less of this information available. And even when it is available, many feel they can’t rely on it.
A growing number reportedly have been based on the USDA-reported boxed beef price, but this market is moving to extended contracts as well. There could be more USDA beef reports coming, the analyst said.
CATTLE, BEEF RECAP
The USDA reported a formula base price for live FOB fed steers Wednesday of $123.13 per cwt and for FOB fed heifers of $122.05. FOB dressed steers went for $189.95, while FOB dressed heifers sold at $189.66.
The USDA choice cutout Wednesday was up $5.48 per cwt at $310.80, while select was up $3.38 at $287.99. The choice/select spread widened to $22.81 from $20.71 with 88 loads of fabricated product and 22 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.90 to $2.00 a bushel over the Sep futures and for southwest Kansas were unchanged at $0.70 over Sep, which settled at $5.56 1/4 a bushel, up $0.07.
There were 34 heifer and six steer live cattle contracts retendered for delivery Wednesday at one and three heifer ans 27 steer contracts tendered at zero.
The CME Feeder Cattle Index for the seven days ended Tuesday was $156.19 per cwt down $0.14. This compares with Wednesday’s Aug contract settlement of $158.77 per cwt, down $0.55.