071214 Calf Prices Jump; Futures Fall

Washington, DC - Over the week of Thanksgiving, fed cattle prices jumped higher, with the 5-Area average live steer price working out to $95.09 – up from $92.68 the week before. This week cash business was active on Wednesday in most regions. Live prices were basically steady with last week at $95 to $95.50. Dressed prices were also steady at $150 in Nebraska and $152 in Kansas. Cattle slaughter is expected to be large this week, projected at 677,000 head this week compared to 630,000 a year ago (last week was a short week due to the holiday). Hog slaughter has picked back up a bit, with this week’s kill estimated at 2,397,000 this week versus 2,159,000 a year ago.

Calf prices appeared to be a bit stronger around the country this week following last week’s improvement in the fed cattle market. At Oklahoma City, feeder steer and heifer prices were steady to $1 higher in a light test. Stocker steer and heifer prices were $2 to $4 higher, with the greatest advance on the steers. At Lexington, Kentucky, feeder steer prices were steady; feeder heifer prices, steady to $2 higher. Stocker steer prices were uneven: up to $3 lower on 4-weights but with some quality 5-weights as much as $3 higher. Stocker heifer prices were mostly steady, though a few sales on top quality heifers were $4 to $6 higher. At West Plains Missouri, prices on steers and heifers under 600 pounds were $2 to $5 higher, mostly $5 to $8 higher on 350-450 pounders. Prices on weights over 600 pounds were firm to $3 higher in a light test. At Arkansas auctions this week, prices on all classes were called $2 to $6 higher compared to the last report two weeks ago. At Georgia auctions, feeder steer and heifer prices were steady to $2 higher. Stocker steer prices were $1 to $2 higher, and stocker heifer prices were steady to $2 higher.

At Mississippi auctions this week, steer prices were $1 to $5 higher, and heifer prices were steady compared to two weeks ago. Steer prices at Mississippi auctions this week were reported as follows: 200-300 pounds, $135- $145; 300-350 pounds, $125-$135; 350-400 pounds, $120-$125; 400-500 pounds, $110-$120; 500-600 pounds, $95-$108; 600-700 pounds, $85-$95; 700-800 pounds, not reported. Slaughter cow prices were steady this week. For the week: breakers, not reported; boners, $40-$44; lean (850-1,200 pounds), $35-$44.

Live Cattle futures took a good bounce last week in holiday-shortened trading as stronger cash prices provided a fundamental boost to the market. This week, cattle futures gave back all of that gain and then some as fairly early cash business took place at prices no better than steady. Most contracts are back down to their lowest levels in about a month. In Friday’s trading, the February contract broke through support at just over $96.50 and then fell to its lowest level since last June. April is flirting with a break below the $97 mark. Live Cattle futures closing prices on Friday (with change from last Friday’s close in parentheses) were as follows: December $93.85 (-2.92); February $95.77 (-2.93); April $97.10 (-1.92); June $93.02 (-1.58); August $93.77 (-1.08).

Feeder cattle futures started the week with modest gains in response to lower corn futures early in the week. Feeder futures quickly picked up on the bearish sentiment afflicting the entire cattle complex, however, and posted sharp losses for the week. Feeder Cattle futures closing prices on Friday (with change from last Friday’s close in parentheses): January $107.70 (-3.00); March $108.30 (-2.80); April $109.90 (-2.40); May $111.00 (-2.22).

Corn futures mostly just moved sideways this week. There was little really new fundamental information in the corn market this week, so futures continued mostly to trade on the influence of outside markets. Some rather good news there: nearby crude oil futures were down sharply this week, closing below $90 on Friday for the first time since late October. The dollar gained some against other major currencies this week. A weak dollar has been contributing to large grain exports, thus providing support for corn prices. On the other hand, a weak dollar has also had quite a lot to do with strong poultry and pork exports. With large Q1 meat production coming up, we may be hoping that dollar appreciation doesn’t get out of hand. December Corn closed on Friday at $3.84 ½, down 4 ½ cents from last week’s close. Soybean futures were down pretty sharply on Friday after a week of bouncing sideways. Prices remain high. January beans closed on Friday at $10.80, down 20 ¼ cents from last Friday’s close.

Wholesale beef prices have moved higher in the last couple of weeks, helping support last week’s gains in cash fed cattle prices. This week, prices improved until about mid-week. After that, Choice prices slipped back a little while Select prices fell more significantly. Movement has been modest. On Friday afternoon, the Choice cutout stood at $150.21, up $1.66 from last Friday. The Select cutout stood at $133.81, down $0.65 from last Friday.

Source John D. Anderson, Department of Ag ricultural EconomicsMississippi State University

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