Prices for plain-quality thinner-fleshed six-weights are outpacing fancier feeder cattle in this weight range as grass interests want rugged cattle with compensatory gain to turn out immediately with stockers they have been assembling all winter.

However, the nation’s fourth-mildest winter on record has most feeder cattle coming through the winter months in a fleshier condition than normal, which is not what most backgrounders are looking for.

The first full week of March saw sharp losses on the CME cattle futures, which brought about the first measurably lower market on feedlot replacement cattle since September as the fed cattle market also fell back after finding severe resistance at the record 130.00 mark.

Most agree that present price levels for feeder cattle weighing over 750 pounds may be near their peak unless the finished cattle market breaks into the 130s or feed costs magically become cheaper.

However, few fear that the market is in for any sort of wreck as cattle inventories are the lowest in 60 years and increased heifer retention will most likely be the norm for the next three or four.


Calf and yearling prices should remain high and many more feedlot breakevens could come up short as cattle feeders have become spoiled by outstanding performance and have now turned disgusted if a pen only gains, say three pounds per day.

On the other hand, inexpensive weight gains on early spring forage offers the ability for grass interests to cheapen stocker cattle back into a reasonable profit margin, even at current prices.

Thin-fleshed stockers with enough age to take full advantage of early season grass can easily yield gains from 50 to 60 cents a pound, which is more than $1 per pound cheaper than that pound is worth.

Hence, it won’t take long for a five-weight steer costing near $200 per hundredweight (cwt) to reclaim the upper 150s that are presently being quoted by the summer CME Feeder Board, which is based on a 750-pound steer.

Negative packer margins have been well advertised by the agriculture media, as if some red ink on a corporate meat company’s vested beef processing interest could threaten the record cattle market. Indeed, long-term profit struggles could cause a scaling back of future slaughter capacity.

But plenty of pens of feedlot closeouts have come up short during the recent run-up in feeder cattle prices without flattening the trajectory of the advance.

The bottom line is: Cattle feeders have no more bearing on packers selling beef products for a loss than packers have when feedlots pay too much for their replacements.

This is why vertical integration (which spoiled the chicken and pork business for producers) continues to spread in the beef cattle industry.

Currently, nearly 70 percent of America’s fed beef is grading Choice or better, which has resulted in a narrow and sometimes inverted Choice/Select spread.

All cattle people can do is produce the best possible product in the most efficient methods and take advantage of profit opportunities when they come along.  end_mark

Corbitt Wall
Missouri Federal –State Supervisor
USDA Livestock & Grain Market News