Cattle
Both Feeder Cattle and Live Cattle futures contracts showed substantial gains on Tuesday. Cash cattle were expected to be steady to higher this week. Packer margins are in the black, but a $2.69 drop in the Choice beef cutout Monday and a $4.17 drop on Tuesday may cause an unwillingness for packers to up bids. Packer margin is not an indicator of profitability; it is a measure using the cutout value plus drop credit minus the price paid for live cattle. Operating costs such as taxes, labor, and debt servicing are not included. Packer margins versus profitability have been a discussion topic after the news of Tyson shuddering a plant and cutting back production at another. Cattle markets do have the potential to stabilize following the recent slide in prices, however.
Winter weather slows gains and brings down cattle and carcass weights while the holidays typically bring strong beef demand. The recent cold and snow in the Midwest will cause cattle feeders to hold firm to their asking prices. We generally have the largest feeder cattle runs behind us by December, and while there is nervousness in the market, calf prices typically increase this time of year. Border policy will continue to be watched closely as there has been no firm news regarding reopening the Mexican border. Last week’s estimated harvest was 501,000 head on the holiday shortened week. The total was 84,000 fewer than the previous week and 32,000 fewer than a year ago. This week’s total could be as high as 575,000. The Choice beef cutout was $2.35 lower, averaging $368.92, but as noted, was under pressure early this week.
Top Quality
Top quality steers and heifers were mostly steady bringing $212-$223/cwt. Mixed Choice and Select steers and heifers ranged from $205-212/cwt. High grading Holstein steers were mostly steady at $187-$212/cwt, with some higher. Lower grading steers brought $168-$186/cwt. Silage fed, under finished, or heavy dairy breed steers brought $90-$168/cwt. Dairy Beef cross steers were steady, bringing $179-$223. Cows were mixed. Most cows brought $103-$136/cwt with a few selling into the mid $150s. Lower yielding cows brought $55-103/cwt. Doubtful health and thin cows brought up to $55/cwt. Dairy breed bull calves were steady, selling from $600-$1,100/head with some to $1,300. Dairy breed heifer calves brought $300-$750/head. Beef and Beef Cross calves were steady from $700 to $1,450/head, with some higher. Light and lower quality calves sold up to $60.
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