In the latest trading week, it was better, on average, for cattle feeders to have sold on a dressed formula basis than on any other program, according to data from the Livestock Marketing Information Center in Denver.
If selling on a live basis, the data showed that cattle feeders did best last week by selling on a formula.
The data was for weeks ending on Monday, the LMIC spreadsheets said. The LMIC also broke out the price distribution in $2 distribution groups, but for the purposes of this study, only the weighted average net pricing is considered. Net pricing includes all premiums and discounts that applied to each sale.
BEST BET WAS FORMULA NET
On average, over the period of the data from Aug. 10, 2021, to last week, the best way to sell cattle on a live basis for slaughter was on a formula basis, but it wasn’t by much. Over the period, the average of weekly prices for formula net sales came to $164.89 per cwt.
That was followed by forward contracting with a net price of $164.72 per cwt, followed by an average negotiated grid net price of $164.54 per cwt and the negotiated cash basis of $163.16 per cwt.
It can be concluded, then, that the least productive way to sell fed cattle to packers was by weekly negotiations. It seems packers are willing to pay a little extra for some assurances that cattle will be available within a given time period, and that they will give a little extra for cattle that yield, or are likely to yield, better-grading carcasses.
The data also showed that over the period of the data, fed cattle pricing tended to grow. General inflation has never been a supporting factor in beef or fed cattle pricing, but supply has, and entering into the equation over the last few years has been increased consumer demand for quality beef.
Beef packers have been able to modulate beef production via slaughter rates while taking advantage of larger finished cattle to produce more beef per head. All while consumers have clamored for choice product.
FORMULA NET BEST BET FOR DRESSED SALES
At a survey-period average of $260.56 per cwt, formula net also was the best bet for selling cattle on a dressed basis. But negotiated sales were a close second at $259.63. The least productive was forward contract net sales at a period average of $253.35 per cwt.
Just as with cash sales, the general trend has been higher with no apparent peak.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $185.85 per cwt to $190.15, compared with last week’s range of $186.88 to $193.00 per cwt. FOB dressed steers, and heifers went for $292.85 per cwt to $294.15, compared with $293.96 to $299.32.
The USDA choice cutout Tuesday was up $1.51 per cwt at $308.79 while select was down $3.54 at $271.91. The choice/select spread widened to $36.88 from $31.83 with 112 loads of fabricated product and 23 loads of trimmings and grinds sold into the spot market.
The USDA-listed weighted average wholesale price for fresh 90% lean beef was $326.44 per cwt, and 50% beef was $60.88.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.42 to $1.54 a bushel over the Dec corn contract and unchanged in Kansas at $0.25 over Dec, which settled at $4.27 1/4 a bushel, down $0.02.
The CME Feeder Cattle Index for the seven days ended Monday was $253.68 per cwt, up $1.06. This compares with Tuesday’s Nov contract settlement of $254.25, up $2.42.