In general, feeder cattle markets are finishing 2022 strong with momentum going into the new year, said Oklahoma State University Extension Livestock Marketing Specialist, Derrell Peel, in a letter to extension agents called Cow-Calf Corner.
USDA’s Agricultural Marketing Service issued the final Oklahoma weekly auction summary for the year this past week with prices at the annual peak in December for steers under 550 pounds and more than 850 pounds, Peel noted. For those in the middle, 550 to 850 pounds, prices were at the maximum in August/September but were above the annual average at the end of the year.
DROUGHT PERSISTS
Oklahoma remains in significant drought with the latest National Weather Service Drought Monitor showing that more than 98% of the state is abnormally dry or in some stage of drought, he said. The drought caused significant changes in the timing of feeder cattle marketings in the second half of the year.
Weekly feeder cattle sales volumes were larger year over year from July through mid-October and have been mostly smaller since, Peel said. From July to mid-October, the cumulative additional weekly feeder volume was up an average of 18%, totaling more than 71,000 additional head of feeder cattle marketed in auctions during the period.
The year over year decreases since mid-October reduced the cumulative total by about half, meaning the total feeder cattle auction volume in the second half of 2022 so far is up more than 35,000 head, with all of the increase occurring prior to mid-October, he said. Smaller auction volumes since mid-October no doubt are contributing to the strong feeder prices at the end of the year.
NUMBERS TO REMAIN STRONG
Feeder numbers are expected to remain low going into 2023, Peel said. Stocker numbers on wheat pasture are well below normal, suggesting there will not be a large “wheat pasture” run of feeders into March or for graze-out into May.
On Jan. 31, 2023, USDA’s National Agricultural Statistics Service is scheduled to release the annual Cattle (Inventory) report, which will provide cattle inventory numbers and confirm the status of state and national cattle numbers, he said. The report is expected to confirm that significant drought liquidation occurred in 2022 leading to sharply tighter cattle supplies in 2023.
Other market analysts have said that lower supply of cattle (should predictions be accurate) will raise prices for the feeders. This would be a boon to those cow/calf producers who still have cows but could be a real financial struggle for feedlot owners who also are dealing with high corn prices, which may not show much in the way of declines until more is known of South American production or US prospects.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $156.04 to $157.32 per cwt, compared with last week’s range of $155.00 to $158.55. FOB dressed steers, and heifers went for $243.82 to $249.01 per cwt, versus $243.78 to $250.21.
The USDA choice cutout Wednesday was down $0.19 per cwt at $264.86 while select was up $2.39 at $236.29. The choice/select spread narrowed to $28.57 from $31.15 with 86 loads of fabricated product and 32 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were steady at $1.90 to $2.10 a bushel over the Mar futures and for southwest Kansas were unchanged at $1.00 over Mar, which settled at $6.62 1/4, up $0.10 1/4.
No cattle contracts were tendered for delivery Wednesday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $178.14 per cwt up $0.13. This compares with Wednesday’s Jan contract settlement of $183.82, up $0.20.