December 10, 2007

US feeder cattle: Lower prices, heavier Supplies, sharp increase in grains

Compared to the previous week, feeder cattle and calves weighing over 600 lbs sold 1.00-3.00 lower.  Lighter weight calves were not as consistently lower across the nation, but sold with trends that were very uneven.  Monday markets were only slightly weaker, but starting on Tuesday pressure grew more intense when grain prices posted sharp gains. 

Heavier supplies were also partially to blame for the lower feeder market, with nationwide auction receipts 22 percent larger than last week and 13 percent heavier than the same week a year ago.  Feeder prices suffered the sharpest losses where numbers were the heaviest, in Missouri where 58,800 head of cattle were sold in auctions across the state according to the Federal-State Livestock Market News Service.  Several Missouri salebarns were reported to be 3.00-6.00 lower on feeder calves this week with instances as much as 10.00 lower.  Many of the producers who owned these cattle have spent the last 45-60 days weaning their calves for an industry that continuously promotes added value.  

Again this year, most of these cow/calf raisers would have been better off selling their calves right off the cow two months ago.  It's not that weaned and vaccinated calves won't bring a premium on any given week in any given market, but the rules of supply and demand annually depress feeder calf prices in late fall.  Last year this was intensified by the doubling of the corn market and this year by the lack of demand by wheat grazers who were forced off pastures due to record wheat prices.  Snow covered much of the Northern Plains and Midwest this week with cooler temperatures covering most of the nation.  Caring for cattle may be less convenient for caretakers in cold weather, but healthcare situations normally improve as frigid temperatures eliminate many airborne illnesses.  Feedlots sold cattle 1.00-1.50 lower in Texas and Kansas from 94.00-94.50, mostly 94.00.  Northern Plains sales were 2.00-2.50 lower live at 93.00 and 4.00 lower on a dressed basis at mostly 146.00 in the beef.  Last week's reported auction volume included 38 percent over 600 lbs and 43 percent heifers.