Feeder Steer Prices Working Lower

Feeder steer prices continue to work unevenly lower, the latest bump notwithstanding, as continued heavy losses by cattle feeders encourage a more muted sense of need by those who feed cattle for slaughter.
The CME Cattle Feeding Index, a weighted average value for feeder cattle in several markets, declined $0.29 per cwt Monday after a five-day gain of $1.53 to $184.29 on Friday. However, this latest gain in the Index still is below the Oct. 2 level of $187.89 from which the Index dropped on Monday, Oct. 5.
Overall, it is clear the CME Feeder Cattle Index is working lower, and has been since early summer.
Weekly feeder cattle prices in various regions of the US also provide a view toward gradual declines. The only exception is the Billings, Mont., auction where prices for 400- to 500-pound and 500- to 600-pound No. 1 feeder steers moved slightly higher last week. The 700- to 800-pound steers continued to slide.

SLIGHTLY LESS EMPHASIS ON HEAVY FEEDERS

A look at regional market graphs shows a subtle trend emerging over the last two months. In all regional markets highlighted by the Livestock Marketing Information Center, price declines for 700- to 800-pound cattle are slightly more pronounced than those for lighter weights.
That decline can mean one of three things; either the supply of heavy feeders is growing, feeder cattle buyers are losing their myopic focus on the heaviest feeder cattle or both.
The truth very likely is both. Through the summer months, feedlot placements were biased toward the heavier calves as feeders wanted to maximize the weight of cattle going to slaughter while keeping them on feed for as short a time as possible.
But as the packer became inundated with growing supplies of overly fat cattle, the discounts for that extra fat began to reappear and discourage feeding to very large sizes. This may be shifting feeder desires back toward somewhat lighter calves.

MORE HEAVIES AVAILABLE

The number of heavy-weight feeder cattle also may be up as pastures give out later than normal, allowing extra grazing time, essentially free feed.
But as pastures finally give in to the shorter day lengths and wither for the season, these cattle must be auctioned to the feeders, creating a slight bulge in numbers and pressuring prices.
That creates a better environment for the feedlots as prices for replacement feeder cattle decline. USDA data show that the price of 700- to 800-pound feeder steers minus the Southern Plains fed steer price is going down, creating the potential for better profitability down the road.

CASH FED CATTLE TRADE QUIET

Cash fed cattle markets this week remain undeveloped with estimated showlists mixed to lower overall. No bids or offers were heard Monday as buyers remained aloof, hoping futures prices would lose some of Monday’s luster and sellers rooted for further gains that could support cash prices.
Sales last week ranged from $123 to $127 per cwt on a live basis, compared with the USDA’s 5-market average the previous week of $118.61
On a dressed basis, cattle traded last week at $195 to $202, compared with the USDA’s 5-market average the previous week of $187.51.
Wholesale beef prices Monday were higher, with the USDA reporting its choice cutout value at $205.30 per cwt, up $2.30 on the day, and its select cutout at $199.12, up $1.23. For the week, choice was down $2.77 and select was down $3.47.
The choice/select spread widened to $6.18 from $5.11 on Friday.
CME Feeder Cattle Index for the seven days ended Friday was $184.00 per cwt, down $0.29. This compares with the Oct settlement Monday of $189.37, up $0.40.