Feeder Cattle Prices Set Record Highs, Calf Prices a Runaway

The rally continues for feeder cattle prices as new all-time highs were posted last week. The CME Feeder Cattle Index on Tuesday (based on a seven-day moving weighted average of 650-849 – pound Federal-State reported feeder steer sales throughout the high-producing central twelve-state area) broke the previous record of $157.44 per hundredweight posted the last week of February 2012. The index continued marching higher the remainder of the week, closing Friday at $159.36.

A bullish Cattle on Feed report the previous week spurred optimism among cattlemen, and they proceeded to bid up every class of cattle offered for sale. Last week’s auction markets saw feeder cattle trading firm to $3 per hundredweight higher, and calf markets were steady to $5 higher. Select markets in the Central Plains reported calf markets in a runaway with prices $10 to $20 per hundredweight higher.

"These prices are absolutely unprecedented and aided by declining numbers of true yearlings and outstanding demand, especially north of I-70 where corn producing farmer-feeders have been active participants," says USDA Market News reporter Corbitt Wall. "Calf prices continue to benefit from the trickle-down market support and sold steady to $5 higher this week with the Southeast turning positive after trading lower in recent weeks."

Wall says calf buyers are aggressively pursuing light cattle in an effort to keep per-head costs down and maximize their options. He reported a 105-head string of fancy 400-pound steers fetched $224 per hundredweight at last Wednesday’s Torrington, WY, Livestock Commission. Wall said many Midwestern lightweights "easily surpassed the $2 per pound mark without raising too many eyebrows in the sale barns."

The most unbelievable aspect of the current market, however, is that calf prices actually seem reasonable when one studies current feeder cattle prices. A load of 900-pound steers sold last Thursday in Valentine, NE, for $163.50 per hundredweight, a tidy sum of $1,471.50 per head. USDA reported more than 250 head in the top-quality 750-800 – pound range at Valentine averaged 767 pounds and traded at $181 per hundredweight.

"It’s plain that cattle feeders are starting to turn a meager profit on a few of their better performing pens of cattle they were able to get bought worth the money," Wall says. "By Friday afternoon Southern feedyards were passing on $2 per hundredweight higher bids of $126 as the entire cattle complex seems to be headed in the right direction."

Cattle feeders start this week asking higher money as last week’s cash sales at $126 are still $2 discount to the spot October contract. Boxed beef prices are expected to rise seasonally as improved beef demand increases with cooler weather and smaller supplies.