Cattle Market Reports and Analysis
Despite a state-wide drought and market challenges into fall, average prices for Show-Me-Select heifers posted healthy prices at six sanctioned sale locations.
Negotiated cash trade finished the week in a standoff with few sales and little price movement. Feeders and packers both look to benefit from improving winter weather and pen conditions this week.
The onset of severe cold temperatures and snow in a broad spectrum of cattle feeding regions will pull fed cattle production down. Beyond the reduced weekly slaughter head counts, carcass weights are set to plunge.
Severe winter weather across cattle feeding country reduced weekly harvest and damaged feeding performance. Cattle feeders will seek higher prices this week.
Brutal winter weather disrupted cattle markets and significantly curtailed cattle harvest in western Kansas. Cash cattle trades were steady to lower while wholesale beef prices posted a significant rally.
There remains a lot of noise around the issue of LRPs in the cattle markets. That was best described by one of my readers last week: “[most of the critics] don’t even understand the facts, let alone the myths.”
Economics and the impact on weights – both longer-term and decisions based on short term factors will play an important part in determining beef production in 2024.
After reaching a peak price in August, cull cow and bull prices moved higher to end the year on a positive note.
A year ago feeders were concerned about weathered cattle and tough pen conditions and how at times it would be the motivation for sellers to take the market. It’s eerie how not much has changed in that sense.
Cash fed cattle prices traded at higher prices the first week of the New Year despite a significant decline for wholesale beef prices.
Feedyards saw higher cash cattle bids for the second consecutive week as the market closed the year on an upswing. Futures prices finished the week lower.
Multiple packers participated last week in a market that turned higher for the first time since Halloween.
December’s Cattle on Feed showed December feedlot inventories were 102.7 percent of last year. Texas on feed number was up 4% and Kansas was up 7%.
Cattle traded in moderate volumes at higher prices, posting the first weekly gains in more than six weeks. USDA’s Cattle on Feed total was 2% higher.
The pool of bred beef heifers is likely to remain low going into 2024, keeping the prospects of beef cow herd growth minimal in the coming year.
Increased packer margins in recent weeks has encouraged a quicker chain speed. That speed likely will not be supported through the end of the year with two Holiday shortened weeks.
LRPs and options are essential risk management tools, but coffee shop talk suggests LRPs are driving the cash market lower. Let’s examine the data to keep the discussion measured and objective.
Cattle feeding margins fell deeper into the red while packer losses doubled from the prior week. Pork producer margins have now printed red every week for the past year.
Under current market conditions beef exports are expected to decrease and beef imports should increase...exactly the outcome observed thus far in 2023, says economist Derrell Peel.
Cash cattle and wholesale beef prices continued their fourth quarter retreat and record heavy carcass weights suggest cattle feeders have lost marketing leverage.
Few things in cattle market trends are entirely predictable but the fact that carcass weights peak in November is as close to a sure bet as one could identify.
Some blame the recent rout in the futures markets on LRP (Livestock Revenue Protection), a claim that is wholly unsubstantiated. A look at the data confirms LRP blame really is a smoke monster.
Declining cattle futures prices continue to pressure cash prices. The cheaper inventories are working to pad the packer’s pocket as evidenced by a few plants operating on Saturdays.
Market-ready cattle prices have rolled back $10 per cwt. since the end of October and average carcass weights have increased to all-time highs, a sign feedlots are not as current as previously expected.
There seems a belief that speculators – either too many or not quite enough – are solely responsible for driving the market one direction or another. But bashing speculators is what people do who don’t like the price.
Cattle futures markets have come under criticism lately for their volatility. A common theme is there are “too many shorts” or “too many longs.” That ignores the fundamental fact that futures markets must come in pairs.
Reported national feeder cattle volumes (auction, direct and video/internet) are up 5.6% year-over-year since Labor Day, with the majority in September which contributed to the large September feedlot placements.
Cash cattle prices decline 3% for the week as December Live Cattle futures hit a five-month low and nearby feeder futures post seven-month low.
Cash fed cattle prices have increased 4.8% during the month of November in the past five years, yet carcass cutout values have begun the month in a bit of defensive pattern.
Last week saw several feedyards pass on steady bids from packers. Cattle feeders are counting on declining numbers of Choice carcasses to bring packers back with higher bids.