FED CATTLE: Fed cattle traded $1 to $2 higher compared to last week on a live basis. Prices on a live basis were mainly $109 to $110 while dressed prices were mainly $175.
The 5-area weighted average prices thru Thursday were $109.95 live, down $1.01 from last week and $174.88 dressed, down $2.38 from a week ago. A year ago, prices were $111.25 live and $175.06 dressed.
The finished cattle market is attempting to break through price resistance at $110. If there is any follow through next week then it is likely the fed cattle market will officially be out of its fall slump and heading toward better days. Live cattle futures for October traded over $111 on Friday while the December contract traded over $115. The December contract will become the nearby contract next week which means the market may see some jockeying in the December contract to close some of the $4 gap that currently exists. The better news is the February live cattle contract which is trading over $120. Note to cattle feeders: better closeouts are coming down the line, and they will be here soon.
BEEF CUTOUT: At midday Friday, the Choice cutout was $225.97 up $0.35 from Thursday and up $8.09 from last Friday. The Select cutout was $199.72 up $0.63 from Thursday and up $5.61 from last Friday. The Choice Select spread was $26.25 compared to $23.77 a week ago.
Monthly cattle slaughter data was released this week with September heifer and cow slaughter being higher than a year ago while steer slaughter lagged behind September 2018. Federally inspected heifer slaughter through the first nine months of 2019 totaled 7.25 million head which is an increase of 7.4 percent compared to the same months in 2018. On the other hand, federally inspected steer slaughter is 1.9 percent lower through the first three quarters of 2019 when compared to the same time frame in 2018 and totaled 12.32 million head. Beef cow slaughter from January through September is 2.3 percent greater than 2019 and totals 2.30 million head. It is difficult to say if these slaughter levels will actually result in a reduced beef cow herd size when the January 1 Inventory report is released, but these slaughter levels have supported beef production in 2019. Despite strong beef production, prices continue to find support due to domestic demand and international demand. This will only be further supported if a deal with China is established.
OUTLOOK: Based on Tennessee weekly auction market price averages, steer prices were steady to $2 lower compared to last week while heifer prices were unevenly steady compared to a week ago with most being $2 lower to $2 higher. Slaughter cow prices were unevenly steady compared to the previous week while bull prices were steady compared to a week ago. Cattle producers must have greased the trailer wheels this week as cattle were rolling into town at a rapid pace. Over 10,000 feeder cattle and over 1,000 slaughter cattle were sold through the nine reported auctions in Tennessee this week. Six of the nine auctions that were reported had marketings in excess of 1,000 head. This is a trend that is likely to be maintained until the week of Thanksgiving barring any extreme rainfall events that keep trucks and trailers out of the field. Prices for freshly weaned calves may suffer the next several weeks if the total number of head being marketed remains elevated. The large swings in temperature this time of year result in high risk cattle if they have not been weaned and vaccinated. The increased risk of morbidity and mortality force cattle buyers to lower their bids to account for the additional veterinary cost and death loss. The one aspect of the market that has become favorable for sellers is the rainfall that has supported fall forage growth. It may be too late in the fall to reap the full benefits of the rain as it relates to cool season forage growth, but it does bring optimism to the market which may result in some buyers remaining active in the market. There is little to say about management decisions at this point. Most producers have already made the decision to either sell calves straight off the cow or to precondition calves the next couple of months. The results of which was the best decision from a profit standpoint will not be known until the beginning of 2020.
The October cattle on feed report for feedlots with a 1000 head or more capacity indicated cattle and calves on feed as of October 1, 2019 totaled 11.28 million head, down 1.1% compared to a year ago, with the pre-report estimate average expecting a decrease of 1.1%. September placements in feedlots totaled 2.09 million head, up 2.0% from a year ago with the pre-report estimate average expecting placements up 1.5%. September marketing’s totaled 1.74 million head up 1.1% from 2018 with pre-report estimates expecting a 1.1% increase in marketings. Placements on feed by weight: under 600 pounds down 1.2%, 600 to 899 pounds up 5.2%, 900 pounds and over down 4.3%.
ASK ANDREW, TN THINK TANK: I have been asked to do a program early next year that focuses on step-by-step marketing. At first thought this would seem extremely elementary to most readers and maybe it is to some. However, my experience has been that many producers who have been in the cattle business for decades do not even consider that every decision they make influences their final product and the marketing scheme. Thinking about the basics, the breeding season, breed of cattle, and cattle genetics would be the starting point for most producers. However, those decisions should not be made until an intended market is identified such as selling feeder cattle at the auction market, retained ownership through the feedlot, direct marketing of beef or whatever market is the intended endpoint. After identifying an endpoint, every management decision can influence the final market, but a producer does not have to stay with the initial endpoint if market conditions present a better opportunity. This is a fluid business which is one reason it is so enjoyable.
Source : tennessee.edu