Weekly Livestock Comments
By Emmit Rawls
November 20, 2009
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Click to subscribe to podcastBEEF CATTLE: Fed cattle sold early this week at mostly $1 lower than last week. Prices in the S. Plains were $83 to $84, with prices of 82 to $84 live in the North and $129 to $133 dressed. The 5 area prices thru Thursday were $82.78 live and $130.05 dressed compared to $83.68 and $131.18 dressed last week. A year ago prices were $87.15 and $139.04. Cutouts once again could not get past the $140 level on the Choice. Cutout values on Thursday compared to a week ago were up .30 on the Choice and down $1.30 on the Select. At midday Friday the Choice was $139.05 down .56 and the Select was $132.12 up .05. The Choice Select spread was $6.97 compared to $6.22 last week. There are reports of some cattle being pulled forward, which is consistent with some declining harvest weights. With some expectation of increasing fed supplies and “turkey time” near at hand, moving some cattle ahead of normal finished weights before price weakness could be expected. Today’s cattle on feed report will yield information on fed beef supplies in the first half of 1010. Trade expectations are for cattle on feed Nov. 1 in lots of 1,000 head or more to be up 1.5%; cattle placed on feed in October up 2.5% and cattle marketed in October down 3%. Today’s cattle on feed report was about in line with trade estimates. Cattle on feed up 1%; Net placements on feed in Oct. +1.9%; Marketed in Oct. Down 3%. Report is neutral to slightly bullish on the smaller than expected placements. Placements were higher in 6 states with an 18% increase in Iowa, an 11% increase in Ok. and a 5% increase in Neb. This contrasts with a 3% decline in Texas. In fact Nebraska actually had 10,000 head more cattle on feed than Texas. Placements by weight were as follows: under 600# down 12.1%, 600 to 699 up 4.9%; 700 to 799 # up 6.6% and over 800 # up 9.5% On the Tennessee auctions this week feeder classes were called steady to $3 lower. Slaughter cows and bulls were called steady. Weekly average receipts per sale on 11 quoted markets were 817 head compared to 807 last week and 752 a year ago. The sharply high corn market on Monday and weaker cash fed cattle prices dampened prices paid for feeder cattle on the auctions this week. At current prices, there are risk management strategies which should assure from zero to a positive price margin on feeder and stocker cattle. Even that does not assure a profit as cost of gain needs to be managed as well. We will need to work thru the somewhat larger supply of fed cattle during the December to March period. There could be periods of higher fed cattle prices next spring with any spark in consumer demand. Therefore risk management strategies should leave the top side of the market open unless a fixed selling price would offer a return too good to turn down. This means some form of options or Livestock Risk Protection insurance. Thus there are opportunities for short term or longer term retained ownership of calves by the cow calf operator, or purchase opportunities for those who buy stocker or feeder cattle. Retail beef prices in October rose slightly to $3.851, .013 higher than September but 7.3% lower than October 2008 when prices were $4.109. Retail beef prices reached a low of $3.79 in July.
TECHNICALLY SPEAKING: Based on Thursday’s closing prices. December live cattle closed at $83.68. Support is at $83.28, then $82.61. Resistance is at $83.96, then $84.63. The RSI is 40.84. February cattle closed at $85.38. Support is at $85.16, then $84.78. Resistance is at $85.53, then $85.91. The RSI is 41.74. April cattle closed at $87.87. Support is at $87.25, then $87.12. Resistance is at $88.25, then $89.00. The RSI is 42.45. November feeders expired on 11/19. Jan. Feeder cattle closed at $93.02. Support is at $92.94, then $92.82. Resistance is at $92.02, then $92.40. The RSI is 33.20, nearing an over sold condition. March feeders closed at $92.85. Support is at $92.62, then $92.35. Resistance is at $93.70, then $94.10. The RSI is 30.70, an over sold condition. Today’s closing futures prices were: December live cattle $83.95 +.27; Feb. $85.42 +.05; April $88.05 +.17; Jun. $85.17 +.32. Jan. Feeder cattle $92.67 +.85; Mar. $93.57 +.72; Apr. $94.92 +.92. May $95.90 +.80. December corn $3.91 down 4 cents.
