Cattle Market Notes: Week Ending Oct 4, 2012

Well, due to the fiasco taking place in our nation’s capital there are no reports to provide cash market direction. Granted trading has continued to take place but (surprise, surprise) no one is willing to make this information public without mandatory reporting. The lack of USDA reports will create some hiccups. Many fed cattle formula prices are based on USDA cash market reports. The live cattle futures price, while not based solely on USDA reports as it is cash settled, derives quite a bit of information from these reports. All basis contracts could very well suffer from the lack of price transparency. The feeder cattle futures contract is not cash settled and is based on an index from multiple cash market reports across the U.S. 

Futures markets continued to trade throughout the shutdown. Excluding the nearby October live cattle futures contract fed cattle futures were moderately higher. Feeders are still reveling in the September on feed report and declining corn prices. All 2014 contracts were triple digit higher (January up almost $2, all others $2.10 or higher than last week).

Corn continues to decline. On Monday (prior to the screeching halt by most things operated by USDA) USDA NASS released their quarterly grain stocks report which sent the market reeling. Total corn inventories as of September 1, 2013 totaled 824 million bushels. Pre-report expectations had called for this number to be 681 million (average across all estimates). The highest guess called for 750 million bushels to be in storage, so the reported total was 9% above the highest estimate. As a result corn prices tumbled Monday and then moved slightly higher the rest of the week.

Futures Market Summary:

Month Live Cattle Change* Feeder Cattle Change* Corn Change* Soybeans Change*
Oct $128.05 -0.20 $164.45 +0.05
Nov $165.95 +0.90 $12.95 -0.25
Dec $134.43 +2.28 $4.43 -0.11
Jan $165.95 +1.95 $12.95 -0.27
Feb $134.30 +0.38
Mar $164.95 +2.22 $4.56 -0.11 $12.79 -0.19
Apr $135.45 +0.70 $165.35 +2.55
May $165.30 +2.30 $4.65 -0.10 $12.58 -0.15
Jun $130.00 +1.20
Jul $4.72 -0.09 $12.53 -0.11
Aug $128.20 +0.90 $166.25 +2.10 $12.43 -0.08
Sep $165.00 $4.78 -0.07 $12.04 -0.04
Source: CME Group
Note: Cattle prices in $/cwt; Corn & Soybean prices in $/bu
*Change from last Friday’s close.

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