The epic collapse of the cattle and beef market continued for the second week in a row, with cash feeder cattle and calves experiencing an unprecedented selloff. It’s just that feeders were so top heavy and had so far to fall that left them so vulnerable. CME cattle futures were sharply lower from Monday through Thursday, then on Friday they turned limit up. Moves like this only accentuate the disgust that cattlemen have with the Board these days, further confirmation of how out of touch the futures game is with the cash market. The speed of this collapse has reminded producers of their reoccurring sickness of playing on a slanted field, overwhelmingly influenced by global corporations that dominate ownership of everything from competing proteins, to the raw feedstuffs, to the bulk of the cattle on feed. These entities bullied independent producers out of the hog business in 1998 and the early rounds of this crash has the same feeling. Packers would love nothing more than to have cattle producers contract farrow to finish, similar to the swine producers. The few large independent cattle feeders appear ready to rollover, as evidenced by their sweetheart negotiations that most have entered into which assure beef packers of their captive supplies. However, salt of the earth ranchers know that it takes acres of grass and constant management to run cows…and they are not likely to give up their independence anytime soon.
Yearling feeder cattle sold another 10.00-15.00 lower this week with feeding weights now well under the 200.00 level in most cases. Most yearlings are now at least 50.00 cwt below where they were early this past summer. The recent brisk fall of the cash feeders had them trading at a discount to the Board, after trading at a premium through most of the long rally. But, with September going off the Board on Friday, now the feeder market has once again lost its’ net with spot October below 185.00. Top sales of yearling feeder steers late in the week in the Southern Plains included a string of 751 lb steers in South Coffeyville, OK at 191.50 and a load of 868 lb steers in Salina, KS at 189.00, according to Cattle Market Central.
Calf sales have evaporated faster than any other class of beef, and the fall calf run has not even fully gotten underway. Calves sold 10.00-20.00 lower this week with some weights and classes of calves having already lost a third of their value in a mere three months. Corn harvest is now in full swing which has removed a large portion of the calf buying base, as grain farmers will think of nothing else until the crops are safely in the bin. Wheat pasture prospects are also not as high as last year, but the main motive for the bottom falling out of the calf market is fear. In the current perspective, there is not a class of lightweights that look attractive for backgrounders and heavier calves don’t stand a chance with feedlots purchasing true yearlings cheaper every day. It does not appear likely that a 500 lb top quality steer calf will yield 2.00/lb throughout the fall run.
Fed cattle sold 4.00-6.00 lower this week with most sales from 128.00-130.00 and a few as low as 125.00. Boxed beef cut-out values lost more than 15.00 in a week’s time and cold storage beef supplies are up 36% over last year. The industry is just now reached the tightest point of market-ready supplies in modern history and the limited slaughter is not cleaning them up. This bodes disastrous for the industry as supplies will start to slowly rebuild next year. Currency values reflect foreign beef as a bargain and US product to be a luxury most countries can’t afford. Friday’s mirage on the CME cattle futures is not expected to last and the long term fundamental picture is not pretty either.