US Feeder Cattle Imports Up

US feeder cattle imports from Canada and Mexico are up from a year ago in an effort to feed hungry US feedlots, USDA figures show.

Year-to-date feeder cattle imports from Mexico, consisting of steers and spayed heifers, through the week ended Friday, is 732,003 head, up 97,851 head, or 15.4%, from 634,152 head in the same period last year.

In addition, imports of Canadian feeder cattle through the week ended Oct. 11 are up 90,553 head, or 40.1%, to 316,588 from 226,035 a year ago.

The USDA adds a caveat to its report saying imports from Canada may include interstate shipments from Hawaii.  These cattle come in through Vancouver, B.C., and then are shipped south into Washington state.  They are counted as Canadian imports since technically they spent time in Canada even though they are US cattle.

The added feeder cattle augmented US-born cattle in the feedlots and boosted placement figures in the monthly USDA Cattle-on-Feed report.  The October report, which comes out Friday afternoon and shows feedlot activity in September, is expected to show placements during the month of 2.026 million head, 1.9% more than a year earlier when placements were lowered by early placements to ease the burden on drought-stricken pastures.

 

FEEDING MARGINS DECLINE

 

While the price of imported and home-grown feeder cattle rose in the latest reporting weeks, further gains may be less robust as feedlot margins retreated last week.

The Sterling Profit Tracker shows feedlot margins falling to $175.72 a head in the week ended Saturday from $227 a head the previous week, a drop of $51.28, or 22.6%, in just one week.  That’s enough to get the attention of cattle feeders.

They may be getting used to the market’s gyrations, though, since over the last month, feedlot margins have oscillated by more than $51 a head.  A month ago, margins were $186 a head before moving up to the $227 recent high and back down again last week.  A year ago, margins were about $89 a head.

Cash cattle prices last week were mostly steady at $163 to mostly $164 per cwt on a live basis, and the high and resilient fed cattle prices continued to eat into packer margins.  The average beef packer margin during the week ended Saturday was calculated to be a minus $45.65 a head, much less than the $66-per-head losses they encountered last year at this time.

 

CASH CATTLE TRADE INACTIVE

 

Cash cattle trading this week remains inactive, with a few packer bids reported in Kansas at $162 per cwt on a live basis and asking prices continue to hold around $167 to $168.

Live cattle futures finished higher Wednesday, as if traders anticipated a higher cash market this week in spite of packer losses and a reluctance to pay more for cattle.

However, smaller feedlot showlists and a stronger wholesale beef market likely added to trader optimism that cash would be up again this week.  So far, no trades have been reported, and most expect a late-week market.

The USDA’s boxed-beef cutout Wednesday was higher with choice up $1.16 per cwt to $251.00 and select up $0.14 to $235.07.  The choice/select spread widened to $15.93 from $14.92, and there were 179 loads of fabricated product sold into the spot market.

The USDA said rib cuts, chucks and rounds were firm to higher.  Trimmings were lower in light-to-moderate demand, but sources say the trimmings market is up overall seasonally.

The CME Feeder Cattle Index for the seven days ended Tuesday was off $0.34 to $240.46.  The Oct futures contract settled Wednesday at $239.45, up $0.50.