Cattle and beef producers and traders were expected to re-shape their market strategies over the next two days as the USDA releases its monthly Cold Storage and Cattle-on-Feed reports.
The Cold Storage report is scheduled for release at 3:00 pm, ET today, and the Cattle-on-Feed report is set for release at 3:00 pm, Friday.
The reports could be some of the most telling and useful of the year as they give a glimpse of cattle and beef supplies heading into the critical year-end holiday season.
Many times, the Cold Storage report falls into the “also ran” category of important reports as supplies of meat hold within a wide range of acceptable levels that vary seasonally. However, when supplies of beef, pork and and/or chicken rise or fall to extreme levels, markets take notice.
Such is the case this year. Total red meat and chicken in cold storage is well above normal and is credited with keeping a lid on product prices.
On-ice supplies of red meat took an uncharacteristic bounce in August, moving to 1.173 billion pounds. August red meat supplies were 226.0 million pounds above the 2009-2013 average of 946.6 million.
The amount of chicken in cold storage was record high in August at 782.1 million pounds after an unseasonal upturn in August. This was 99.1 million above the 2009-2013 average of 682.979 million.
ON-FEED POSSIBILITIES BOOST FUTURES
More abundant pastures, tight supplies and feedlot demand for heavier feeder cattle have combined for most of this year’s pasturing season to keep monthly feedlot placements low. Many expected a steep upturn in July and August placements, but were given only modest gains.
To many, that meant pastures were swelling with unplaced feeder cattle and that September placements would turn upward more aggressively. Delayed winter wheat emergence also was expected to force more feeder cattle into the feedlots during September.
Feeder cattle prices declined in September, suggesting greater availability and possibly more cattle placed on feed. However, continued extreme losses by feedlots may have limited movement out of pastures and into the feedlots, and average analyst estimates put placements about 4% to 6% below September 2014.
One issue that isn’t addressed by many is the possibility of greater feedlot placements into smaller feedlots in the western Midwest. The USDA collects data from feed yards with more than 1,000-head capacity, but small, part-time feeders in the western Corn Belt could take on a few more local calves and still remain under the USDA radar.
Such feedlots have easy access to ethanol plants and wet distiller’s grains, potentially lowering feed costs and siphoning some feeder cattle supplies. This would reduce the USDA placement number and increase the number of ghost cattle on feed.
CASH FED CATTLE QUIET
Cash fed cattle markets were quiet Wednesday with light packer bids of $137 per cwt on a live basis and asking prices at $140 to $145 live and $207 or higher dressed.
Prices last week were mostly $134 to $136 per cwt on a live basis, well up from $123 to mostly $126 to $127 the previous week. On a dressed basis, cattle traded from $205 to $214.50.
Wholesale beef prices Wednesday were mixed. The USDA reported its choice cutout value at $216.49 per cwt, up $1.11 on the day, and its select cutout at $209.99, off $0.37.
The choice/select spread widened to $6.50 from $5.02 on Tuesday, and there were 102 loads of fabricated product moved into the spot market.
The CME Feeder Cattle Index for the seven days ended Tuesday was $190.89 per cwt, up $0.26. This compares with the Oct settlement Wednesday of $194.25, down $0.62.