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In The Cattle Markets

10 September 2009

US - A fall in feed prices looks promising for livestock producers, however cattle prices continue downwards.

Last week, cash trade was very slow to develop. On Thursday, there were some sales in Nebraska and Iowa/Minnesota, and the market looked pretty uneven. Prices (live basis) ranged from mostly $84 to as low as $82. On Friday, clean-up sales in this region looked a little better, with prices firmly at $84. In the Southern Plains, trade was light on Friday with prices in that region steady at $85, but business was very slow at best. Negotiated sales (cash and negotiated grid base) totaled less than 150,000 head last week, implying a substantial carryover on this week’s show lists.

Despite some improvement in fed cattle prices week-before-last and a very shaky performance by corn futures, feeder and stocker cattle markets were generally off a bit last week. Oklahoma City prices were called $1 to $2 lower on feeder classes and $1 to $3 lower on stocker classes. The price trend across the Southeast was basically consistent with this performance. While some developing seasonal weakness in calf prices may have been a factor, it seems that caution on the part of buyers had a lot to do with last week’s market. Feeding cattle has been a tough business for a while now; and the expected fall rally is fed cattle has yet to show up. That makes for little enthusiasm in the calf market.

On a positive note (as long as you’re not a corn producer), the corn market took a pretty good hit last week. For the past few weeks, delayed crop development and expectations of unseasonably cool weather led traders to build a substantial weather premium into corn and soybean futures prices. With weather through the first part of September now looking very favorable for late season crop development, soybean futures fell sharply last week. This, along with the direct effect of favorable weather, pressured corn prices lower. The nearby (September) contract dropped just over 20 cents for the week, closing on Friday at $3.20 ½.

Data Source: USDA-AMS Market News Week of 9/4/09 Week of 08/28/09 Week of 09/05/08
5-Area Fed all grades, live weight, $/cwt $83.74 $84.41 $98.54
Steer all grades, dressed weight, $/cwt $129.91 $131.67 $154.43
Boxed Beef Choice Price, 600-900 lb., $/cwt $142.83 $143.67 $159.06
Choice-Select Spread, $/cwt $7.63 $7.26 $7.03
700-800 lb. Montana 3-market average, $/cwt $98.51 $97.23 $108.85
Feeder Steer Nebraska 7-market average, $/cwt $102.90 $103.64 $115.10
Price Oklahoma 8-market average, $/cwt $100.50 $100.62 $112.96
500-600 lb. Montana 3-market average, $/cwt $102.02 $101.00 $110.23
Feeder Steer Nebraska 7-market average, $/cwt $113.76 $117.76 $123.06
Price Oklahoma 8-market average, $/cwt $107.22 $109.01 $115.05
Feed Grains Corn, Omaha, NE, $/bu (Thursday) $3.13 $3.15 $5.37
DDGS Price, Nebraska, $/ton $92.50 $93.00 $145.00
WDGS Price, Nebraska, $/ton $27.00 $27.00 $54.38

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