Dillon Feuz
In the Cattle Markets
New year, new hope
This past year is probably one most cattlemen are glad to have over, and I am sure they are looking for better things in 2010. After averaging near $93 per hundredweight (cwt.) for fed cattle in 2007 and 2008, prices declined to average only $83 in 2009. In a disastrous 2008, feedlots lost on average more than $100 per head. That was followed by only a slightly less disastrous 2009, where my model would predict feedlots lost about $85 per head.
The cow-calf industry didn't fare much better this past year. Winter hay feeding cost for the 2008-2009 year was probably the highest many producers had seen. Calf prices this past fall were about equal with 2008 prices, so it is likely that most cow-calf producers will have been less profitable in 2009 than they were in 2008.
What hope is there for 2010? You are probably tired of hearing this, but much of your hope for better prices will be determined by the overall economy. If people are still out of work or concerned they might lose their job, it is a good bet they won't be spending a lot of money on steak. Without some help from beef demand, any price rally may be short-term and tempered by the inability to move beef.
However, with that being said, the beef industry is in a good position as far as supply goes. The actual U.S. Department of Agriculture (USDA) numbers for the Jan. 1 inventory will not be released until February, but the beef and dairy cow herds in the U.S. are sure to be smaller than a year ago. Smaller herds mean fewer calves and feeders for this fall, so that should help calf prices.
Year over year cattle-on-feed numbers should also tend to be smaller, and so we should be seeing less beef on the market. Again, this should tend to support beef prices at higher levels than were seen in 2009 so long as beef demand is at least stable. There also appears to be some positives on the export market that could also support higher prices.
In the short term, fed-cattle prices have recovered about $5-$6 per cwt. from the lows in early December. If the market could put on another $3-$4, feedlots should be breaking even. For ranchers who have retained calves to sell them after the first of the year, that market has gained about $10 per cwt. from fall lows in October.
Cull cow prices have also strengthened $4-$5 per cwt. If these price trends can continue into spring, not only might cowboys be seeing green grass again, but they may also have some green to put in their pockets.
The markets
The fed-cattle market was higher this past week. Most trade took place on Wednesday and Thursday this week on decent volume. Prices were $84-$85 on a liveweight basis and were mostly $137 on a dressed basis.
Choice boxed beef prices were $1 higher this week. The Choice-Select spread decreased and is narrower than the typical level. Feeder-cattle prices were generally higher this past week compared to the last reported prices. Montana prices were generally $3-$4 higher on both weights of feeder cattle compared to pre-holiday trade. Nebraska prices were $1.50 and $3.50 higher for 750- and 550-pound (lb.) steers. Oklahoma prices were about $1 higher for 750- and 550-lb. feeder cattle compared to pre-holiday trade.
Corn prices were $0.02 per bushel (bu.) higher than last week. Dried distillers' grain prices were $1.50 per ton lower and wet distillers' were about $0.50 per ton lower in Nebraska for the week.
| Table 1: Markets for the week | ||||
Week of 1/8/10 |
Week of 1/1/10 |
Week of 1/9/09 |
||
| 5-Area Fed Steer |
all grades, live weight, $/cwt. | $84.82 |
$84.12 |
$83.75 |
| all, grades, dressed weight, $/cwt. | $136.74 |
$135.21 |
$133.52 |
|
| Boxed Beef | Choice price, 600-900 lb., $/cwt. | $140.23 |
$139.06 |
$144.50 |
| Choice-Select spread, $/cwt. | $5.26 |
$5.91 |
$7.97 |
|
700-800 lb. |
Montana 3-market avg., $/cwt. | $93.96 |
---------- |
$93.00 |
| Nebraska 7-market avg., $/cwt. | $97.04 |
$95.72 |
$98.65 |
|
| Oklahoma 8-market avg., $/cwt. | $95.06 |
---------- |
$96.66 |
|
500-600 lb. |
Montana 3-market avg., $/cwt. | $111.21 |
---------- |
$109.38 |
| Nebraska 7-market avg., $/cwt. | $112.84 |
$109.39 |
$113.25 |
|
| Oklahoma 8-market avg., $/cwt. | $104.64 |
---------- |
$106.97 |
|
| Feed Grains | Corn, Omaha, Nebraska, $/bu. (Thurs.) | $3.92 |
$3.90 |
$3.91 |
| DDGS price, Nebraska, $/ton | $112.60 |
$114.13 |
$147.90 |
|
| WDGS price, Nebraska, $/ton | $44.90 |
$44.25 |
$50.88 |
|
| Source: USDA-AMS Market News. | ||||
Comment on this article.