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CME: COF Report Skewed Toward Lower End of Pre-report Estimates

05 December 2019

US - Last week, this publication noted that placements in October were rumored to be quite large, but that the "Cattle on Feed" report skewed toward the lower end of pre-report estimates, according to Steiner Consulting Group, DLR Division, Inc.

One of the data points that did not support large placements last month was the weekly feeder cattle receipts, which showed auction volumes down 11 percent from last year. Early snowfalls delayed some of the calf-run in the Dakotas which could mean those placements will show up in the next Cattle on Feed report due for release 20 December.

With the close of November, auction receipt data is complete for another month. November auctions showed a small rise compared to last year, up 2 percent. Notably, direct sales being reported also increased, up 20 percent compared to last year.

Video and Internet auctions are still reporting sluggish volumes. October showed those sales were down 34 percent from the prior year and November shows a similar decline, off 40 percent. Total weekly receipts that combine all three of these marketing channels are up 1 percent over last year compared to the 10 percent below posted in October.

Some cow-calf producers may have been waiting on better prices, but that may have only helped marginally compared to the previous month because most prices are still below a year ago in 500-600 pound weight categories. The auction market in Billings, MT is showing steers just above $163 per cwt, compared to $167 last year.

In South Dakota, 500-600 pound steers improved from the low in October of $155 per cwt to $163 last week. Last year, South Dakota auctions for 500-600 pound steers were above $170 per cwt the whole fourth quarter. Georgia prices are experiencing a similar pattern.

The first week of October, prices were the lowest of the year at $121 for 500-600 pound steers, and ahead of Thanksgiving prices calves brought $133 per cwt. Nebraska has been one of the few markets not to see an increase in prices for 500-600 pound calves in November. Those prices have remained very stable—around $160 per cwt. The year-over-year comparisons can be seen in the graphs below.

One difference of interest between this year and last year is the spread between heifers and steers for this same weight category. In three of the four auctions discussed above, the discount for heifers in the same weight group has lessened since last year. Montana is the only auction where heifers are posting the same discount to steers as last year, between $20 and $21 per cwt.

In both Nebraska and Georgia markets, last November heifers were sold over $22 per cwt below steers, while this November that figure is closer to $17 per cwt. In South Dakota, the discount for heifers in November was $20.79 compared to $18.19 per cwt this year. This is supportive of tightening calf supplies noted in the 1 July Cattle inventory.

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