Here's some good information from the TCA on some of the factors affecting current prices. The Tn market report is towards the end.
Tennessee Cattlemen's Monday Memo
September 28 2015
Factors impacting Current Cattle Market
1) A slowing global economy, particularly in Asia a top export destination for U.S. beef. Commodity prices around the world are under pressure. Volatility in the global financial markets has spread to the commodity markets.
2) It's important to remember that despite recent record-high beef prices, consumer demand remains strong.
3) A stronger U.S. dollar makes U.S. beef less competitive than beef from Australia or Brazil, two of our largest competitors in the global marketplace.
4) Drought in Australia has resulted in heavy liquidation of their domestic cattle herd, pouring beef tonnage into global markets at discounted prices.
5) Important export markets, such as Russia, remain closed to beef from the U.S., diverting that beef tonnage to other markets at reduced prices.
6) Good summer weather which contributed significantly to feedlot conversions and led to large numbers of heavyweight cattle.
7) The decline in market prices has encouraged slow marketing of fed cattle to the packing sector and larger carcass weights have contributed to increased beef tonnage, despite smaller overall numbers. That issue creates a snowball effect that requires time and timely marketing to correct. Competing meat supplies are also large.
8. Losses in the packing sector for consecutive years through 2014 and into early 2015 have resulted in shuttering of plants and reduced operating hours as the sector worked to mitigate the losses. That decline in capacity has made it difficult for feeders to effectively market their cattle in a timely manner, contributing to the backlog of market-ready and heavyweight cattle in the supply chain.
9) The futures markets have presented few opportunities to reduce risk over the past year or more, preventing opportunities to protect margins in any sector.
Market Highlights
University of Tennessee Extension
Trends for the Week compared to a week ago
Slaughter Cows
$3 to $7 lower
Slaughter Bulls
$3 to $9 lower
Feeder Steers
Under 500 lbs. $19 to $10 lower, over 500 lbs. $10 to $16 lower
Feeder Heifers
$9 to $15 lower
Feeder Cattle Index
Wednesday's index: 195.75
Fed Cattle
The 5-area live price of $128.47 is down $6.60. The dressed price is down $10.78 at $202.47.
Corn
December closed at $3.89 a bushel, up 12 cents since last Friday.
Soybeans
November closed at $8.89 a bushel, up 22 cents a bushel since last Friday.
Wheat
December closed at $5.07 a bushel, up 21 cents a bushel since last Friday.
Cotton
December closed at 60.64 cents per lb, up 0.09 cents per lb since last Friday.
Livestock Comments
Dr. Andrew P Griffith
FED CATTLE: Fed cattle traded $6 to $7 lower on a live basis compared to a week ago. Live prices were mainly $128 to $130 while dressed trade occurred between $200 and $208. The 5-area weighted aver-age prices thru Thursday were $128.47 live, down $6.60 from last week and $202.47 dressed, down $10.78 from a week ago. A year ago prices were $153.12 live and $242.00 dressed. Fed cattle prices have declined about $24 per hundredweight on a live basis and $36 per hundredweight on a dressed basis the past six weeks which translates into revenues more than $300 lower per head than they were in the middle of August. Furthermore, current week prices are about 16 percent lower than prices for the same week one year ago. Reason and logic in a normal year would indicate prices are near the bottom, but the market could continue to act contra-seasonally and dip further. If this is the bottom then the average upswing would be expected to be about 13 percent which would have live cattle trading near $145 late in the year. However, the large number of heavy end cattle on feed is expected to put a damper on such a positive price swing.
BEEF CUTOUT: At midday Friday, the Choice cutout was $213.45 down $1.40 from Thursday and down $13.74 from last Friday. The Select cutout was $210.68 down $0.94 from Thursday and down $9.05 from last Friday. The Choice Select spread was $2.77 compared to $7.46 a week ago. Packers are struggling to move beef as record retail beef prices weigh on consumers relative to the lower priced meat protein alternatives. The Choice cutout price has declined nearly 13 percent in the past 5 weeks while the Select cutout price has declined more than 10 percent over the same time period. The beef market is being saddled with losses due to demand being soft and beef production on the increase. Feedlots are trying to move large numbers of heavy cattle through the system which has depressed live cattle price which in turn has depressed beef cutout prices. The aver-age dressed weight of steers from one week ago was 963 pounds which is 37 pounds heavier than the same week one year ago. These heavier weights put more beef on the market per animal harvested and it is expected that these heavier cattle will persist for several more weeks. The beef cutout will continue to be pressured until the heavy end cattle are pushed through the system, and it is not likely the price will recover very quickly.
OUTLOOK: Tennessee weekly auction market prices took a severe blow this week across all classes of cattle. Most weight classes of steers lost $80 to $100 per head compared to a week ago while heifers lost $70 to $80 per head. The slaughter cow and bull markets have not been immune to the downward price movements as they lost between $30 and $100 per head compared to last week's market. All classes of cattle tend to come under pressure during the fall months. Calf prices are pressured during the fall months due to the large number of spring born calves that are being marketed during the time period and the reduced availability of pasture. Similarly, many producers tend to market their cull cows in the fall immediately following calf weaning. Two of the primary reasons for marketing these cull cows in the fall are because the calf is now weaned and the producer does not want to feed the animals through the winter. Both reasons are plausible reasons to market cull cows to the slaughter market, but they may not lead to the most profitable decision every year. The feeder cattle market tends to soften some during the fall due to the expectation of when these cattle will come off feed. The feeder cattle market is more closely related to the fed cattle market and the beef markets which play into the feeder cattle seasonal.
