The CME Feeder Cattle Index has fallen below last year but remains well above the five-year average as the index this year trades on a flatter plain than last year.
More calves are coming to the auction barns and more are expected through the fall as they are weaned and/or removed from seasonally fading pastures.
Yearling feeder cattle last week were higher, but the index remained well within the sideways price channel already established for the year.
Demand for yearling feeders is highest in corn-producing North Central Plains states where this year’s corn crop is reported to look very good with high yield prospects. Carryover stocks of corn in these areas also mean ample feed possibilities, especially when combined with the byproduct of many ethanol plants in the region – distillers grains.
But even in areas where corn is abundant, the feeder cattle market is not as robust as last year. A graph from the Livestock Marketing Information Center shows weekly prices for 700- to 800-pound feeder steers in South Dakota.
A slow decline in prices can be seen from the early June peak, although the action remains within this year’s sideways pattern, reflecting the CME Index’s move.
FUTURES SEE INCREASED SUPPLIES
Feeder cattle futures prices are reflecting trader anticipation of more cattle to come in the fall, market analysts said. They also show buyer reluctance to put cattle on feed when the fed cattle market will not give them a profitable outcome.
For instance, last Wednesday, feeder cattle futures gained nearly $2.50 per cwt as corn prices fell sharply following the USDA’s World Agricultural Supply and Demand Estimates, which predicted larger-than-expected corn yield and production. But as live cattle futures fell on worries about beef demand and bearish macro-economic issues, the feeder market was not able to hold the gains.
Yet cash feeder cattle markets, while softening, are much more resilient to price changes than are the futures markets. Prices seem to be tied more directly to week-to-week supply than the futures market, which trades more on expected supplies and demand.
But even though feeder cattle supplies are growing, early year shortages mean year-to-date feeder supplies are behind last year and well behind the five-year average, which is helping to underpin prices for now.
CASH FED CATTLE MARKETS QUIET
Cash cattle markets remained quiet Tuesday with packer bids reported at $146 per cwt on a live basis in southeast Nebraska and dressed-basis bids at $232 to $233. Sellers were asking $152 live and $240 dressed.
Cattle traded lightly last week, with cattle selling at $148 to $152 per cwt on a live basis, steady to down $2 from the previous week. On a dressed basis, cattle last week sold at $240, up $2 to $4.
The USDA reported lower boxed beef prices Tuesday with choice down $0.44 per cwt at $245.08 and select off $0.14 at $236.25. Volume was active with 120 loads of fabricated cuts sold into the spot market.
The USDA said ribs, chucks and loins were steady while rounds were weaker. Trimmings also were weak.
The CME Feeder Cattle Index for the seven days ended Monday was $216.54 per cwt, up $0.04, compared with the Tuesday Aug settlement of $214.55.