Feeder Cattle Markets Active, Strong

Feeder cattle and calf markets were active in the first week of December.  Receipts were up as sellers caught up with business following the Thanksgiving Day holiday.

For the week, the USDA reported total sales from live auctions, direct sales and video/internet auctions at 346,000 head, compared with 149,300 the previous week and 340,000 in the same week a year earlier.

Prices for calves were steady to $5 per cwt higher.  Some reported prices were as much as $15 higher.  Yearlings were about steady but suffered from lower futures prices late in the week.

 

MARKET MOVING AWAY FROM “BAWLERS”

 

As the season progresses, fewer freshly weaned calves, or “bawlers” are showing up in the auctions.  Seasonally, there are fewer of these calves to sell, and buyers are paying a premium for long-weaned calves, especially those from ranches and farms with a reputation for high-quality calves.

Last week, the El Reno, Okla., auction reported prices for reputation calves that had been away from their mothers for a long period of time were $4 higher than the previous week.

A newly refurbished beef slaughter and packing plant in Tama, Iowa, is fostering hopes for higher fed cattle prices in the region, and sources report that farmer feeders are buying feeder cattle.  Much of this farmer/feeder buying interest can be attributed to lower corn prices and a desire to find a more profitable way to market the grain than just selling it to the local elevator.

 

FEEDER MARKET HOLDING STRONG

 

Feeder cattle futures prices continue to hold within a $10 range where they have been stuck for the last two months.  A Jan contract floor was established in October with three attempts to drop below $228.00 per cwt.

Subsequent selloffs resulted in only one close below that mark – the close of Oct. 29 with a settlement of $227.95 per cwt.  The Oct. 30 session marked at low of $227.50 but a close back above $228 at $228.47.

Technically, the $228.00 level is a strong floor

But $237.00 per cwt also appears to be a level of strong resistance.  The contract reached a high of $236.50 on Oct. 8 with a close that day of $236.32.  The next day, there was a spike high of $238.95, but the market could not hold it and actually closed lower at $235.30.

The next test of the contract high occurred Nov. 17 with a top of $237.67 per cwt.  The $238.00 level seems to loom large in the eyes of traders.

The market, however, may retest the $228.00 floor in the next few weeks.  Monday’s gap lower on daily charts and its limit-down close at $231.87 augur for an immediate retest of the Nov. 26 low of $230.37 with the next stop at the $228.00 level.

However, the CME Feeder Cattle Index for the seven days ended Friday was $242.49 per cwt, down a sharp $2.33 from $244.82 and well above Monday’s Jan close of $231.87.  This may put the brakes on a retest of the $228.00 channel low.

 

BEEF PRICES DECLINE FURTHER

 

Beef prices remain under seasonal pressure, and sources report that traders fear a seasonal decline in product demand.  The USDA reported Monday that its choice cutout value, at $251.98 per cwt, was down $0.56, while its select cutout, at $235.36, was down $1.33.

For the week, the choice cutout was down $5.50 per cwt, and the select cutout was off $9.98.

Monday, the USDA reported that only 76 loads of fabricated product moved into the spot market.