Market Notes

Dr. John Michael Riley

August 26, 2011

 Cash Cattle: 

Cash fed and feeder cattle were lower.  Texas live cattle mostly traded at $112.50/cwt and Kansas live cattle were at $113/cwt.  Live prices in Nebraska were in the same range at $112.50-$113.50/cwt with dressed prices called at $180/cwt.  Feeder steers in Oklahoma City were $2-$5/cwt lower and feeder heifers were $3-$6/cwt lower.  Steer calves at OKC were steady to $4/cwt lower with heifer calves $4-$8/cwt lower.  Mississippi auction markets for feeder steers and heifers were $1-$5/cwt lower.  Slaughter cows and bulls were steady.

Futures:

Live cattle futures price moves were mostly logically this week.  Contracts through the remainder of 2011 were steady to lower reflecting the higher placements in last week's on feed report.  Those cattle will most likely be coming off feed between now and February 2012, at the latest, pushing supply higher over that time frame.  Fewer cattle should be available after then which provided support to deferred contracts.
Despite the limited supply of feeders that is expected to be coming down the pike, feeder cattle were lower.  With supplies of cattle in feedlots at the third highest on record, lower cash fats and higher corn, feeder demand could dwindle going into the fall as placements typically climb toward a peak in October.
The broken record continues - crop growing conditions continue to keep prices on edge.  The percentage of the crop rated good and excellent declined 3 points while that rated poor and very poor increased 2 points.  The uncertain corn yield pushed prices higher this week across all corn futures contracts.             

Beef:

Wholesale beef prices were mixed this week.  Choice moved higher, at $187.25/cwt up $2.20, while Select prices were lower, down $0.63/cwt at $181.12.  This led to a near doubling of the Choice-to-Select spread.  The Labor Day weekend is nearing and prices are shifting to the expected increased demand for beef grilling cuts.

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