Weekly Market Summary... 

For the week ending January 19, 2018 

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 The Cattle Range Market Trendlines:

With the exception of boxed beef, the other market indicators gained ground this week.  The market remains within the relatively narrow trading range that has been in place since early fall.

10 Day Market Trendline

Change from Previous Day: -0.19% 
  Change from 10 Days Ago: +0.77% 
  Change from 60 Days Ago: -2.33%

The Trendlines are indicators of overall cattle/beef market strength and are based on daily market factors.  Each daily factor is the aggregate weighted total of the Gain/(Loss) for 12 market indicators compared to the previous trading day. 

Weekly Market Overview:

National Feeder & Stocker Cattle Weekly Summary:

RECEIPTS:     Auctions   Direct     Video/Internet   Total 
This Week     225,000     51,100         2,400         278,500 
Last Week     372,300     39,800       118,200       530,300 
Last Year       248,400     60,200        83,400        392,000
Compared to last week, steers and heifers trends were all over the board.  Early week sales (if auctions were open due to severe cold temperatures and treacherous roads) of feeder steers and heifers were reported steady to 8.00 lower; mid-week sales were reported 2.00 to 8.00 higher after futures rallied and Live Cattle Futures had near limit higher moves on Wednesday.  Steer and heifer calves followed the same trendline for the week; steady to 6.00 lower early week and steady to 8.00 higher mid-week.  Bidders and buyers flipped their buyers cards readily in those mid to late week auctions as they tried to keep up with the uptick in futures. 
With the CME closed Monday, Tuesday rolled around and the frenzy was on again.  After the Feeders closed last Thursday at 143.82; it has been up from there again.  The roller coaster is hopefully hitting another high and can sustain the momentum in weeks ahead.  In the North Plains, heavier fleshed backgrounded cattle are plentiful however grass cattle and high quality replacement heifers are in high demand currently with not enough to go around for the buyers.  Last week's large supply of cattle on offer across much of the country had the bears running for the woods thinking that feedyards were full and the longs would dictate the market.  Anecdotes of North Plains feedyards shipping cattle to the South Plains to complete kills for this week were abuzz around the industry with feedyards willing to wait and see if prices get better later in the week.
Freezing cold temperatures the past few weeks have been a concern for the wheat crop in all areas.  Producers do not like to see that low of temperatures around and they are keeping watch on their fields to see how much winterkill they will incur.  Dressed steer slaughter weights were reported at 900 for the week ending January 6, 2018; 5 pounds below last year and 10 pounds below the previous 5 year average.  This week's big news centered around the largest cattle feeder in the world divesting some assets and selling their U.S. feedyards to an investment firm for approximately $200 million.  According to reports the current management team and agreements to supply a packer with cattle will continue.  Auction volume this week included 64 percent weighing over 600 lbs and 42 percent heifers.

Stocker Steers:

Feeder Steers:

Stocker & Feeder Cattle Weekly Receipts: 

Weekly sales of Stocker Calves & Feeder Cattle sold via auctions, direct country sales, and video/Internet sales as reported by the UDSA Market News

Five Year Moving Average - Stocker, Feeder, & Slaughter Steers:

Cattle Futures Summary: Live cattle futures closed the day with losses of 32.5 to 75 cents, with nearby Feb down a nickel. Feeder cattle futures were $1 to $1.575 in the red. The CME feeder cattle index on January 18 was at $148.01, up $1.54 from the previous day. Wholesale boxed beef values were lower on Friday afternoon. Choice boxes were down 83 cents at $204.86, with Select boxes 71 cents lower at $200.16. Estimated week to date FI cattle slaughter is at 615,000 head including Saturday. That is 4,000 head more than last week. Cash trade was slow to develop this week, but late trade after Friday’s bell was reported in the $122-123.50 range. USDA reported Beef export sales for the week that ended Jan 11 totaled 15,008 MT. That was slightly ahead of the previous week and much larger than the same time last year. Shipments of beef were tallied at 15,072 MT, nearly 5.06% above the same week in 2017. Managed money spec traders were at their lowest reported CFTC bullish position since Nov 2016 on Tuesday. 

Mexican Feeder Cattle Weekly Import Summary

Receipts EST: 12,000     Week ago Act: 6,290     Year ago Act: 17,332
Compared to last week, steer calves and yearlings firm to 8.00 higher. Heifers 3.00 to 8.00 higher. Trade moderate to active, demand moderate to good. Supply consisted of steers and spayed heifers weighing 300-600 lbs. 
Feeder steers: Medium and large 1&2, 300-400 lbs 170.00-190.00; 400-500 lbs 150.00-170.00; 500-600 lbs 140.00-152.00; Medium and large 2&3, 300-400 lbs 155.00-175.00; 400-500 lbs 135.00-155.00; 500-600 lbs 125.00-137.00.
Feeder heifers: Medium and large 1&2, 300-400 lbs 145.00-160.00; 400-500 lbs 135.00-150.00; 500-600 lbs 125.00-140.00. 

Selected Auction Reports: 

"Click" on individual auction links for complete report
Tulia Livestock Auction - Tulia TX 
Receipts:  3170    Last Week:  4133    Year Ago:  939 
Compared to last week:  Feeder steers and heifers sold 5.00 to 10.00 higher as prices rebounded from last week's loss.  Trade activity was active on very good demand.  More calves in the offering this week as the drought continues and winter wheat is getting short.


Pratt Livestock Feeder Cattle Auction - Pratt, KS 
Receipts:  2312              Last Week:  3550                 Year Ago:  1834 
Compared to last week: Feeder steers 650-1000 lbs 4.00-8.00 higher; Feeder heifers 650-850 lbs 3.00-6.00 higher on a light test. Steer and heifer calves steady to higher undertone noted on a light supply.


Farmers & Ranchers Livestock Commission Co. - Salina KS 
Receipts:  3808    Last Week:  3089    Year Ago:  3088 
Compared to last week: Steers 600-1050 lbs 1.00-6.00 higher; 600 lbs and under steady undertone noted. Heifers 600-1000 lbs 3.00-4.00 higher; 600 lbs and under higher undertone noted.


Huss Platte Valley Auction - Kearney NE 
Receipts:  4300    Last Week:  4977    Year Ago:  3891 
Compared to last week steers sold fully steady to 5.00 higher. Heifers under 750 lbs sold 5.00 to 8.00 higher with no other comparisons. Buyers bid readily from start to finish on all offerings. Good demand was also noted for top quality Red Angus steers with very good demand for replacement heifers.


Valentine Livestock Auction Market - Valentine NE 
Receipts:  1510 Last week:    Last year:  
Bred Cow and Heifer Auction consisted of black and red angus offerings bred to lbw black and red bulls. Several offerings of bred heifers to calve Feb and Mar AI'd for 2 to 3 days and bull breds calving 20 to 40 days.


Denison Wtd Avg Feeder Cattle Auction - Denison IA 
Receipts:  2286  
Cattle where Steady to $4 higher or lower depending on flesh compared to Monday Sale.  Offering of feeder cattle over 600 pounds was 79 Percent with 52.9 percent steers and 47.1 percent heifers.


El Reno Cattle Narrative - El Reno OK 
Receipts           Week Ago             Year Ago 
  7,189                15,130                  5,684 
*** Final Report *** Compared to last week:   Feeder steers 8.00-10.00 higher.  Feeder heifers 4.00-8.00 higher.  Demand very good as cattle futures posted another positive day.  Steer and heifer calves were lightly tested, however most 
 trades sold 2.00-4.00 higher.


Mitchell Livestock Wtd Avg Report - Mitchell SD 
Receipts:  8075    Last Week:  3590    Year Ago:  7177 
Compared to last week:  Steers under 600 lbs sold with higher undertones in a narrow comparison, 600-650 lbs 1.00 to 6.00 higher, 650-850 lbs mostly 7.00 to 10.00 higher with couple instances seen of 15.00 higher, 850-900 lbs 4.00 to 6.00 higher, 900-1000 lbs steady to 3.00 higher in narrow comparisons.


Cattleman's Livestock Auction - Dalhart, TX 
Cattle and Calves: 1,450      Week ago: 2,747      Year Ago:  1,895  
Compared to last week:  Steer and heifer calves under 500 lbs firm, instances heifer calves 500-600 lbs 2.00-4.00 higher.  Feeder steers and heifers over 600 lbs 3.00-4.00 higher.  Slaughter cows and bulls 1.00-2.00 higher.


Joplin Regional Stockyards Feeder Cattle Wtd Avg - Carthage MO 
Receipts           Week Ago              Year Ago 
  2,322                 8,736                     2,656 
**CLOSE***  Compared to last week,  steers under 600 lbs unevenly steady, over 600 lbs 4.00 to 6.00 lower, heifers under 600 lbs steady to 3.00 lower, over 600 lbs 2.00 to 6.00 lower.  Hazardous travel conditions in the trade area curtailed the receipts.


Sioux Falls Regional Livestock wtd Avg Report - Worthing SD 
Receipts:  6293    Last Week:  4998    Year Ago:  4081 
Compared to last week:  Feeder steers 550-600 lbs steady to 5.00 lower, 600-650 lbs mostly 5.00 to 7.00 lower, 650-700 lbs 2.00 to 6.00 lower, 700-800 lbs steady to 2.00 lower, 800-850 lbsunevenly steady, 900-1000 lbs 7.00 to 10.00 lower. 


Tri-State Livestock Auction Market - McCook NE 
Receipts:  2360    Last Week:  3610    Year Ago:  0 
Compared to last week, steers and heifers were steady - 4.00 higher, except steers weighing 850, were 3.00 lower. Demand was good on all offered. Steers accounted for 57 percent and heifers 43 percent of the offering. Weights over 600 lbs 69 percent and weigh cows and bulls.


Winter Livestock - La Junta CO... 
Receipts:  7585    Last Week:  8010    Year Ago:  1656 
Compared with last Tuesday: Steer calves under 700 lbs steady to 2.00 higher. Heifer calves under 500 lbs steady to 1.00 higher, 500 to 700 lbs 1.00 to 3.00 higher. Yearling feeder steers steady to 2.00 lower. Yearling feeder heifers  mostly steady.


Russell Wtd Avg Feeder Cattle Auction - Russell IA 
Receipts:  3920    Last Week:  5322    Year Ago: No Sale- ICE 
Compared to the sale last week: Feeder strs mostly 1.00-3.00 lower and feeder hfrs mostly 1.00-2.00 lower. Trade Active and Demand Moderate today. Receipts this week included 72 percent feeder cattle over 600 lbs; 68 percent of the feeders were strs and 32 percent were hfrs. 


Green Forest Livestock Auction - Green Forest AR 
Receipts:  276    Last Week:  623    Year Ago:  1016 
Compared to one week earlier, slaughter cows unevenly steady, slaughter bulls steady, feeder bulls, feeder heifers, feeder steers, and bull calves lightly tested, heifer calves steady, steer calves lightly tested, bull calves steady, replacement cows lightly tested. 


Clovis Livestock Auction - Clovis NM 
Receipts:  2595          Week Ago:  4278       Year Ago:  2137 
Compared to last week:  Feeder steers and heifers mostly 3.00-6.00 higher, instances 7.00-15.00 higher on 300-400 lb heifers and 700-800 lb heifers though quality more attractive.  Slaughter cows 3.00 higher; bulls steady on limited  receipts.


Oklahoma National Stockyards - Oklahoma City, OK 
Receipts           Week Ago             Year Ago 
  8,292                12,217                  2,736 
** Add Close Correction on 750-800 lb Steers and update with actual receipts***Compared to last week:  Feeder steers traded 2.00-6.00 lower, feeder heifers 600-800 lbs. steady to 3.00 lower, 800-1000 lbs. 4.00-6.00 lower. Steer calves brought steady to 2.00 lower, heifer calves 1.00-5.00 lower.


Cullman Stockyard - Cullman AL 
Receipts:  1002    Last Week:  000    Year Ago:  1397 
Compared to last market covered: Slaughter cows and bulls sold steady to 2.00 higher. Feeder bulls and steers sold to 2.00 higher. Feeder heifers sold steady. Replacement cows and pairs sold steady. 


Toppenish, WA Livestock Auction - Toppenish WA 
Receipts:  1675    Last Week:  2140    Year Ago:  2000 
Compared to last Thursday at the same market, stocker and feeder cattle steady to 3.00 higher in a light test. Trade active with good demand for all classes. Slaughter cows steady to firm. Slaughter bulls 3.00-4.00 higher. 


Blue Grass South Livestock Market - Stanford KY 
Receipts:  107    Last Week:  145    Year Ago:  624 
Compared to last Monday:No comparison due to limited supply. Feeders-68,Slaughter-37,Replacements-2 Supply included 22 percent over 600 lbs and 31 percent heifers.

Direct Sales of Feeder & Stocker Cattle:

WY, Western NE & Western Dakotas Direct Feeder Cattle Wtd Avg (Fri) 
Receipts: 2,440     Week Ago: 2,874    Year Ago: 1,467 
Compared to last week, 800 lbs steers sold steady. Not enough comparable heifers for a market trend. Demand was good as the CME posted good gains in mid-week trading letting hedgers to procure a few loads of cattle.


AZ-CA-NV Weekly Feeder Cattle Review (Fri) 
Confirmed 0 
Compared to last week, trade inactive.  Trade should resume after next Thursday.  Cattle weighing over 600 lbs totaled 0 percent. Heifers totaled 0 percent.


IA-South MN Direct Feeder Cattle Weekly (Mon) 
Receipts:  0    Last week: 0     Last Year:  81 
Compared to the last report:  Feeder steers and heifers not  tested.  Prices based on net weights FOB after a 3 percent shrink or equivalent and 5-10 cent slide on calves and 4-6 cent slide on  yearlings from base weights. 


Eastern Cornbelt Direct Feeder Cattle Summary (Fri) 
This week: 1,612      Last week: 270      Last Year: 140 
Compared to last week:  Not enough current FOB delivered cattle last week for an accurate market trend.  Supply included 100 percent over 600 lbs; 78 percent heifers.  Prices based on net weights FOB after a 3 percent shrink or equivalent and 5-10 cent slide on calves and 4-6 cent slide on yearlings from base weights.


Colorado Direct Feeder Cattle Report (Fri) 
Receipts: 5,065        Last Week 3,986        Last Year 4,316  
Compared to last week:  Feeder steers and heifers traded with a higher undertone compared to last week’s limited offerings. an accurate market trend.  Demand light to moderate.  Supply consisted of 100 percent over 600 lbs; 25 percent heifers. 


Kansas Direct Feeder Cattle Summary (Fri) 
Receipts:  2,027          Last Week: 1,481         Last Year 2,310  
Compared with last week: No comparable FOB trades from last week for an accurate market test, however a firm undertone is noted. Volume includes 100 percent 600 lbs and over.  Feeder supply includes 77 percent steers and 23 percent heifers.


Montana Direct Feeder Cattle Wtd Avg (Fri) 
Receipts: 520          Last Week 685          Last Year 557  
Compared to last week:  No test for feeder Steers and heifers.  Supply includes 100 percent over 600 lbs and 89 percent heifers. Unless otherwise stated prices are FOB weigh point with a 2-3 percent shrink or equivalent and with a 8-12 cent slide on calves and 4-8 cent slide on yearlings from base weights.


New Mexico Feeder Cattle Report (Mon) 
Receipts:  2600    Last Week:  2800    Year Ago:  2200 
Compared to last week:  Not enough comparable sales of Current FOB steers or heifers for a market trend.  Trade activity was slow to moderate on moderate demand.  Supply consisted of 98 percent steers and 2 percent heifers.


Northwest Wtd Avg Direct Feeder Cattle Report (Fri) 
Receipts:  2,566    Last Week:  1,519    Year Ago:  2,200 
Compared to last week:  Feeder steers lightly tested with last week few sales steady to 6.00 higher.  Feeder heifers 1.00-3.00 higher.  Some cattle at the lower end of the price range were contracted early in the trading period.


Oklahoma Direct Feeder Cattle (Fri) 
Receipts: 1,298        Last Week 3,342        Last Year 5,087  
Compared to last week:  Feeder steers and heifers lightly tested again this week on a Current FOB Basis, however a higher undertone was noted.  Receipts this week consisted of 100 percent over 600 lbs and 76 percent heifers.


Texas Direct Feeder Cattle (Fri) 
Receipts:  27,100    Last Week:  19,900    Year Ago:  36,700 
Compared to last week:  Current FOB sales of steers and heifers traded unevenly steady.  Trade was active on good demand.  The CME feeder cattle futures regained footing throughout the trading week as prices closed in the green.  

Representative Sales of Cows & Pairs:

Reported by USDA Market News for the week ending January 19th
  • McAlester, OK:
    • Replacement Cows:  Medium and Large 1-2 1-6 yr old 1350-1635 lb cow 4-8 months bred 1300.00-1425.00; 7-8 yr old 900-1350 lb cow 6-8 months bred 1075.00-1210.00 per head. 
    • Pairs:  Medium and Large 1-2  5-8 yr old 1200-1400 lb cow w/100-275 lb calf 1225.00-1325.00 per pair. 
  • Oklahoma City, OK:
    • Replacement Cows:  Medium and Large 1-2  2-4 yr old 850-1300 lb cow 3-7 months bred 700.00-1150.00; 7-10 yr old 1025-1550 lb cow 6-7 months bred 700.00-950.00 per head. 
    • Pairs:  Medium and Large 1-2 pkg 7 yr old 1200 lbs black cow w/200 lb calf 1225.00 per head. 
  • Salina, KS:
    • Bred Cows:  Medium and Large 1  1005-1230 lbs 6-9 months bred 1535.00-1800.00.  Medium and Large 1-2  845-1060 lbs 6-9 months bred 1100.00-1460.00 all per head.  Second Calf to Solid Mouth:  Medium and Large 1 Middle-Aged 1235-1300 lbs 6-9 months bred 1760.00-2035.00.  Medium and Large 1-2 Middle-Aged 1165-1295 lbs 3-6 months bred 1350.00-1610.00; 1240-1300 lbs 6-9 months bred 1500.00-1650.00.  Large 1 Middle-Aged 1305-1470 lbs 6-9 months bred 1750.00-2060.00.  Large 1-2 Middle-Aged 1310-1530 lbs 3-9 months bred 1250.00-1675.00; 1600-1635 lbs 6-9 months bred 1375.00-1600.00 all per head.  Short Solid to Broken Mouth Cows:  Medium and Large 1-2 Aged 1255-1290 lbs 6-9 months bred 840.00-950.00.  Large 1-2 Aged 1350-1700 lbs 6-9 months bred 835.00-1100.00 all per head. 
    • Pairs:  Medium and Large 1 Middle-Aged 1105-1190 lb cow w/150-200 lb calf 1860.00-1950.00.  Medium and Large 1-2 Middle-Aged 945-1150 lb cow w/150-200 lb calf 1460.00-1700.00 all per head. 
  • Roswell, NM:
    • Replacement Cows: Medium and Large 1-2 Young 855-1263 lb cows 3-8 months bred 700.00-1125.00, per head; middle aged 805-1430 lb cows 3-8 months bred 560.00-775.00, per head; aged 850-1265 lb cows 3-8 months bred 585.00-800.00, per head. 
    • Cow/Calf Pairs:  Medium and Large 1-2 Middle aged pkg 1075 lbs w/100-150 lb calves 1075.00, per pair; aged indiv 1000 lb cow w/225 lb calf 975.00, per pair. 
  • West Plains, MO:
    • Bred Cows:  Medium and Large 1-2  2-7 yr old 1062-1705 lb cows in the 2nd-3rd stage 1050.00-1375.00 per head; 1st stage 900.00-1025.00 per head. Short-solid mouth 1055-1450 lb cows mostly in the 3rd stage 825.00-975.00 per head. Medium and Large 2  2-6 yr old 865-1230 lb cows in the 1st-3rd stage 700.00-900.00 per head; Short-solid to broken mouth 1060-1275 lb cows mostly in the 3rd stage 650.00-750.00 per head. 
    • Cow-Calf Pairs:  Medium and Large 1-2  3 yr to short-solid mouth 890-1775 lb cows with 200-250 lb calves 1325.00-1450.00 per pair, 3-n-1 pkg 2 yr old 1085 lb cow in the 2nd stage with 350 calf 1550.00 per pair.  Medium and Large 2  2-5 yr old 1020-1115 lb cows with 125-150 lb calves 950.00-1150.00 per pair; Short-solid to broken mouth 975-1085 lb cows with 125-150 lb calves 850.00-950.00 per pair. 
  • Valentine, NE:
    • Bred Cows:  Medium and Large 1 “AI” bred heifers in 2nd and 3rd trimester 1068-1082 lbs 1625.00-1625.00; 1101-1186 lbs 1500.00-1975.00; 1211-1200 lbs 1975.00; 1300 lbs. Bull bred heifers in 2nd and 3rd trimester 962-990 lbs 1400.00-1450.00; 1000-1099 lbs 1400.00-1800.00; 1116-1182 lbs 1450.00-1875.00; 1234-1257 lbs 1775.00-1860.00.  Young: 2nd and 3rd trimester 1083-1195 lbs 1650.00-2050.00; 1204-1298 lbs 1450.00-1900.00; 1307-1381 lbs 1400.00-1675.00; 1452-1480 lbs 1575.00-1600.00; 1501 lbs 1625.00; 1st trimester 1255 lbs 1600.00.Solid Mouth:  2nd and 3rd trimester 1113-1190 lbs 1100.00-1300.00; 1234-1280 lbs 1500.00-2025.00; 1328-1393 lbs 1200.00-1925.00; 1405-1469 lbs 1500.00-1575.00; 1535-1564 lbs 1275.00-1525.00; 1st trimester 1413 lbs 1300.00. Short Solid Mouth 2nd and 3rd trimester 1200-1256 lbs 900.00-1100.00; 1437-1400 lbs 1075.00. Broken Mouth 2nd and 3rd trimester 1225-1290 lbs 1000.00-1025.00; 1300-1323 lbs 975.00; 1410-1400 lbs 1025.00. 
  • La Junta, CO:
    • Replacement Stock: Medium and Large 1 Young 1200-1290 lbs 1700.00-1750.00, May calvers half load fancy 1225 lbs 1700.00; middle age 1300-1565 lbs 1200.00-1400.00, mostly 1275.00-1375.00, May calvers 1220-1375 lbs 1150.00-1250.00, summer calvers 850.00-925.00; aged short solid mouth 1215-1490 lbs 900.00-1050.00, broken mouth 1100-1535 lbs 800.00-900.00, May calvers 700.00-825.00.  Medium and Large 1-2 Young 1200-1350 lbs 1425.00-1500.00; middle age 1450-1565 lbs 1050.00-1175.00; aged 1100-1225 lbs 650.00-775.00. 
  • Riverton, WY:
    • Bred Cows: Medium-Large 1 Heifers reputation quality packages 860-1095 lbs 1425.00-1585.00, several 730-1160 lbs 1000.00-1385.00, few 825.00-975.00; Young couple reputation quality packages 1035-1160 lbs 1850.00-1900.00, mostly 870-1420 lbs 1300.00-1585.00, several 1000.00-1250.00, few 725.00-925.00, longhorns) 980-995 lbs 460.00-525.00; Middle Aged (Short Solids) 1105-1325 lbs 1200.00-1350.00, few 925.00-1175.00; Aged (Short Term) reputation quality 1135-1610 lbs 900.00-1100.00, several 725.00-875.00, few 625.00-710.00 all per head. 
    • Cow/Calf Pairs: Medium-Large 1 Young 1085-1315 lb cows with 125-150 lb calves 1250.00-1300.00, individual 1210 lb cow with 125 lb calf 1000.00; Aged (Short Term) 1260 lb cow with 220 lb calf 910.00 all per pair. 
  • Arkansas:
    • Replacement Cows:  Medium and Large 1-2  2-7 year old 850-1250 lbs 2nd-3rd stage 88.00-98.00/950.00-1050.00, first stage/open 67.00-77.00, 7-10 year old 2nd-3rd stage 51.00-61.00/725.00-825.00 per head. 
    • Cow-Calf Pairs:  Medium and Large 1-2  3-7 yr old 800-1200 lb cow w/100-200 lb calf 1100.00-1200.00, few to 1500.00; w/200-300 lb calf 1325.00-1425.00. 

Canadian Cattle:

Alberta Beef Producers: Alberta direct cattle sales Thursday saw light trade develop with dressed sales ranging from 272.00-276.00 delivered. Initial sales are 3.00-6.00 lower than last week. All the cattle that traded this week would be lifted in 1-2 weeks. Cash to futures basis levels did weaken this week but still remain historically strong. For the most part this week's cash offering has been clean up. 

Canadian Cattle Prices:

Prices have been converted to U.S. $/CWT. Grades changed to approximate U.S. equivalents 
Exchange Rate: Canadian dollar equivalent to $0.7970 U.S. dollars 
Prices for the week ending January 12th: 


JBS Sells Five Rivers Cattle Feeding

JBS S.A. announced Jan. 17 that its subsidiary, JBS USA Food Co., has entered into an agreement to sell the totality of Five Rivers Cattle Feeding's feedlot operations in the U.S. to affiliates of Pinnacle Asset Management LP for approximately $200 million, including the market value of silage and grain inventories at closing, and subject to adjustments by working capital variation also at closing. Coupled with the acquisition of Five Rivers U.S. shares, Pinnacle also agreed to sign a long-term contract to supply cattle to JBS in North America.
JBS said the conclusion of the transaction is subject to the usual regulatory approvals and adjustments, including corporate approvals, the buyer securing the relevant funding and approval by U.S. antitrust authorities.
The company also said it will use a portion of the proceeds to further reduce debt in Brazil, subject to its stabilization agreement.
Five Rivers Cattle Feeding is the largest cattle feeding operation in the world, with roots in the U.S. dating back to the 1920s. The transaction includes 11 feedyards across Arizona, Colorado, Idaho, Kansas, Oklahoma and Texas, with a feeding capacity of more than 900,000 head of cattle, and a long-term agreement to supply cattle to JBS USA beef processing plants. The current Five Rivers management team will remain in place, led by president and chief executive officer Mike Thoren, to ensure business continuity and build upon Five Rivers’ strong track record of innovation and stewardship.
“The sale of the Five Rivers Cattle Feeding assets and farms is a strategic move that will allow JBS USA to more efficiently deploy working capital and focus on the company’s core food and value-added products businesses,” said Andre Nogueira, CEO of JBS USA. “The transaction concludes the divestment program previously announced and unanimously approved by the JBS S.A. board of directors and more favorably positions the company for future opportunities.”
He continued, “The long-term partnership with Pinnacle will ensure JBS USA’s continued ability to produce high-quality beef products -- including natural, certified humane, raised without antibiotics, source-verified and traditional products -- enjoyed by customers and consumers around the world.”
Jason Kellman, managing partner and chief investment officer of Pinnacle, said the acquisition strengthens Pinnacle's strategic path of investment and development of its global, diversified physical commodity platform. “We are excited to work closely with our operating partner, Arcadia Asset Management, and strategic partner, Ospraie Management, to support Five Rivers’ talented management team,” he said.
JBS divestment update
The announcement was made as part of an update on the progress of the company’s divestment program, wherein JBS said the sale of the majority of the assets comprised by the divestment program was concluded in 2017.
On July 14, 2017, the company entered into an agreement to sell the Five Rivers Cattle Feeding feedlot operations in Canada for $50 million (Canadian; approximately $40 million U.S.). On Sept. 11, 2017, Moy Park was sold to Pilgrim's Pride Corp., which is controlled by JBS, for approximately £1.0 billion (enterprise value). On Oct. 26, 2017, JBS concluded the sale of its shareholding interest in Vigor Alimentos S.A. for approximately 1,112 million reals (enterprise value). These transactions were in addition to the sale of JBS's beef operations in Argentina, Paraguay and Uruguay, which were closed on July 31, 2017, for $300 million (U.S.) plus price adjustment after closing.
JBS said a substantial portion of the proceeds received from these asset sales was used to make extraordinary debt amortization. As a result of the divestment program and the robust cash generation during the period, the company's leverage ratio (net debt-to-EBITDA) decreased significantly from 4.16x at the end of the second quarter of 2017 to 3.42x at the end of the third quarter of 2017.
The company said the results reached in 2017 “clearly demonstrate a successful implementation of the divestment and deleveraging strategy defined by management.”
"JBS has been strengthened by this divestment process and has increased liquidity. We were able to sell the assets for the value we expected, while cash generation has been very strong during the period," JBS CEO José Batista Sobrinho said.