Cattle supplies destined to tighten

Author: Kristy

Compared to last week; all classes of feeder cattle and calves closed 3.00-7.00 higher after moderating slightly, due to Wednesday’s unexpected limit-down CME Feeder Cattle futures.

Earlier in the week, sales were largely 5.00-10.00 higher.  Thursday’s CME trading session in the feeder cattle pit mostly regained Wednesday’s losses and by Friday there were no signs of weakness in the market, which was likely just profit taking as even the biggest high-rollers feel the need to drag the pot every once in a while.

There still seems to be plenty of helium left in the feeder cattle market balloon and no bearish slingshots have been true enough to threaten the rise.

Feeder prices have advanced 40.00-55.00 (CME Feeder Cattle Index is 38.61 higher) so far this year, with calves as much as 70.00 higher through the first six months of 2014.  Earlier this month, the industry was buzzing about 800 lb steers breaking the 2.00/lb level.  On Wednesday, two loads of top quality steers in Green City, MO averaged 920 lbs at 203.15. At the same time, in Kearney, NE over 600 head of 800-850 lb steers averaged 821 lbs at 213.14, not to mention the gooseneck load of little 239 lb steer calves that brought 925.00 per head.  One can only wonder if these quotes wouldn’t have been even more impressive if the feeder board hadn’t been locked down the limit at the time.

Friday’s cattle-on-feed report was nailed by industry analysts this month, with June 1st inventories down 1.6 percent from the same time a year ago.  May placements were down 7 percent and marketings for May were 95.7 percent of 2013.  Beef exports remain strong with Hong Kong this week lifting limits on US beef that dated back to the 2004 BSE scare; they are already our third-best volume customer for the year.  Fed cattle sold steady to 2.00 higher this week with the bulk of sales at 150.00 on a live basis and some packers putting off delivery until early next month.

Cattle supplies are destined to only get tighter with improved pasture conditions allowing ranchers to increase heifer retention and herds already whittled to a nub.  Beef cow slaughter has been running 20 percent or more lighter than last year for the last several weeks.  This week’s reported auction volume included 49 percent over 600 lbs and 41 percent heifers.

Source: USDA Feeder Cattle Review


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