Supplies Could Take Futures Below Average

Weekly feeder steer prices in the Southern Plains are bouncing around near or just above the 2010-2014 average, which means they could be in for a slow rise, were it not for the rising supply.

Data from the USDA’s Agricultural Marketing Service compiled by the Livestock Marketing Information Center show the slow rise in prices that is “normal” throughout the year.

However, the five-year average does not take in the rising supply of a growing US cow herd and 2015’s 2% calf crop increase to 34.3 million head.  Nor does it take in probable increases in calf availability in 2016.

An estimated 28% of the total 2015 calf crop was born in the second half of the year.  Many of these calves are showing up in the auction barns now, but many are not.

Abundant grass in many parts of the country are allowing cow/calf producers and stockers to keep them on pastures longer than in many other recent years, meaning they will be coming to the barns when the grass gives out.




Just when feeder cattle show up at the auction barns or are sold private treaty will vary with the timing of the grass availability and the actual age of the calves.  But last year’s price line gives some clues about when this might occur.

Last year, a summer peak for 700- to 800-pound Southern Plains steers took place the second week of June at $231.05 per cwt, well above last week’s $149.83.  But the actual price isn’t as important as when the decline began – about now.

Some types of grasses begin to lose nutritional value in early to mid-summer.  Variations depend on weather patterns, including heat and rain, but the DNA of some says it’s time to go dormant for the summer.

Yearling calves on those types of grasses will be moved to the feedlots, and increasing numbers will pressure prices in spite of the five-year average that does not incoporate a long-enough period to factor out the latest extended drought.

Summer’s pressure on feeder cattle prices may bleed over into the fall when shorter days and cooler temperatures force many other pastures to go dormant.  This is a popular time for weaning and sending calves to town, but the actual event isn’t as abrupt as it might seem.

Variations in calf size, market outlooks and weather conditions across the country stretch this period into late fall or early winter.  The result is the type of price decline seen last year.




Cash cattle markets Wednesday remained quiet with bids reported at $125 per cwt on a live basis and asking prices at $130 to $132.  In dressed markets, asking prices were around $210.

Cattle last week traded on Friday $3 to $7 per cwt higher at $128 to $132.50 on a live basis.  On a dressed basis, cattle traded at $203 per cwt, down $1, early in the week, but moved to $2 to $3 higher at $206 to $207 later.

The USDA’s choice cutout Wednesday was $0.83 per cwt higher at $225.10 per cwt, while select was off $0.61 at $200.55.  The choice/select spread widened to $24.55 from $23.11 with 118 loads of fabricated product sold into the spot market.

The USDA said beef demand and offerings Wednesday were moderate with chuck cuts weak and rib cuts firm to higher and rounds steady.

The CME Feeder Cattle Index for the seven days ended Tuesday was $148.33 per cwt, up $0.25.  This compares with the Aug settlement Wednesday of $147.37, up $1.92.