The winter snow and ice storm across the Plains and upper Midwest created stressful conditions for cattle feedlots and hampered the movement of cattle to market. The winter weather, along with smaller show lists, provides optimism for higher fed cattle prices this week.
The bulk of last week’s sales occurred at $119 per cwt., with a few at $120. This week on the Fed Cattle Exchange online auction, prices appeared steady to higher, with sales in a range of $120 to $121.25 per cwt.
Prices at this level mean cattle feeders are showing profits in a range of $100 to $150 per head, and this week would mark the ninth consecutive week of positive margins for feedyards after several months of losses. And feedyards have a little more bargaining power this week as showlists are smaller. Feedyards are asking $122 per cwt and higher for direct trade cattle.
While feedyard profitability has improved recently, packer margins have declined, and that may reduce their willingness to bid aggressively on cattle in the coming weeks. Seasonally, however, we’ll soon enter a period of increasing beef demand which should be supportive of prices.