Some Feeder Cattle Project Profit Potential

As the price of feeder cattle climbs, it’s hard to imagine how the calves will break even for those planning to put them on feed, but there are times when they do “pencil out.”

Feeder steers and heifers at the Oklahoma City Stockyards Monday were steady to $1.00 per cwt lower with medium and large No. 1 feeder steer calves weighing 700 to 800 pounds sold at $209 to $221.50 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.  Buyers may expect the fed cattle market to rise to heights that futures traders don’t see, or they could expecting a larger corn crop than is being forecast to take feed costs lower.

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.

A load of 375-pound steers for September delivery, for instance, sold at $254.00 per cwt, and a quick, pocket calculator, comparison showed the buyer might have paid up to $260.00 to break even.

The CME Feeder Cattle Index for the seven days ended Wednesday was $218.23 per cwt, up $0.88 from Tuesday after a decline from record highs in early August.

Seasonally, feeder cattle prices tend to decline slightly beginning in July and rebounding in October.  However, the five-year average decline is small, and last year, prices for southern Plains 700- to 800-pound No. 1 feeder steers rose from may until late October when they leveled out.

This year, those Southern Plains feeder steers began rising in February and reached a record high of $229.59 the first week of August.  To many, the feeder cattle market needed to take a breather from its record highs, but just as many believe prices will turn higher and set new records in coming weeks because of tight supplies.




Weekly beef export sales for the week ended Aug. 21 came in at 10,600 tonnes, up 47% from the previous week, but were down 7% from the prior four-week average of 11,475 tonnes, according to the USDA’s Foreign Agricultural Service.

For the year, the export sales pace is falling behind.  Cumulative sales for the year were listed at 528,700 tonnes, down 2.5% from last year.

A rising US dollar may have something to do with that since the Dollar Index has risen to a high above $82.75 from its cycle low in late June, making US beef more expensive for foreign buyers.

Weekly beef sales increases were noted for Mexico, Hong Kong, South Korea Japan and Canada.




No cash cattle trade was reported Thursday with bids from $151 to $152 on a live basis and around $240 to $241 on a dressed basis.  Asking prices held at $155 to $156 live and $245 to $248 dressed.  Cattle traded last week at $152 to mostly $153 live and $241 to $243 dressed.

USDA’s choice cutout value Thursday fell $0.52 per cwt to $246.89.  This was down $3.57, or 1.43%, from $250.46 a week earlier

The USDA’s select cutout value dropped sharply, moving down $2.33 per cwt to $235.27.  This was $5.55, or 2.30%, below last week’s $240.82.

The choice/select spread widened Thursday to $11.62 from $9.81 and continues to widen seasonally as the percentage of choice production rises against the percentage of select.