Feeder Cattle Review: Cattle Futures Gaining Confidence
Compared to last week, calves traded mostly 3.00-8.00 higher with instances 10.00 higher and yearlings sold mostly steady to 3.00 higher. Active trading this week in the major marketing areas as feeder cattle market continues to rally with many calves headed south for winter grazing.
Demand remains very good for calves and stocker cattle weighing mostly 500-700 lbs with best demand on the long timed weaned and light yearlings with good weighing conditions. These type of stockers need little or no warming-up for grass and will come off pasture as heavy yearlings.
Demand for feedlot cattle in parts of the Northern Plains (mostly Nebraska) is better this week as pen conditions have improved in western and central areas of the trade area. Reports of poor pen conditions in the eastern part of Nebraska and western Iowa are still prevailing. Packers last week had to spend more money to buy fed cattle mostly 1.00 higher at 134.00 on limited trade volume.
Cattle futures seem to be gaining some confidence with box-beef prices posting good gains and smaller showlist. Continued support in the cattle futures this week have definitely given support to the feeder cattle prices. Cattle futures trade also seems to have calmed down and been less volatile the last couple of weeks, hopefully finding more of a structured pace. Feeder cattle prices this week have also been lifted by buying interest in the cattle futures, increasing boxed-beef prices and positive fed cattle expectations.
On Tuesday the Cold Storage Report was released with the largest January cold storage inventory on record for total beef, pork and poultry at 2.270 billion lbs. This was a little over 8 percent higher than last year and near 11 percent higher than the five year average. Beef stocks in cold storage was estimated at 518.5 million lbs, 5.4 percent higher than last year and a little over 10 percent higher than the five year average. Pork stocks came in at 637.0 million lbs almost 7 percent higher than a year ago and 8.2 percent higher than the five year average. Chicken inventories for January came in at 824.8 million lbs, almost 13 percent higher than last year and 22 percent higher than the five year average. Cold storage is generally not a market mover but can give plenty to talk about.
Movement of strong export sales can keep inventory moving and with continued competition from competing meats demand is certainly the key. But, after two weeks of declining boxed-beef values the cut- out has hopefully found its bottom and had impressive moves this week gaining over 6.00 this week, but closing 1.09 lower on Friday at 217.67 compared to last Friday’s close at 211.66 on Choice cut-out. This week’s auction volume included 63 percent over 600 lbs and 39 percent heifers.