Feeder Cattle futures managed to build on the previous session’s gains. Although Live Cattle recovered some during the session, they closed mostly lower, taking away most of the gains from the last session.
Except for 10¢ and 20¢ higher in Apr and Jun, Live Cattle futures closed an average of 43¢ lower (22¢ to 80¢ lower).
Except for 2¢ and 10¢ lower at the back of the board, Feeder Cattle futures closed an average of 58¢ higher (40¢ to 72¢ higher).
Choice boxed beef cutout value was 68¢ lower Monday afternoon at $198.92/cwt. Select was 32¢ higher at $196.44. AMS analysts note that beef trimmings were sharply lower on light demand and heavy offerings.
******************************
Major U.S. financial indices closed sharply higher on Monday, despite lower crude oil prices. More than anything, analysts seemed to credit easing tensions between the U.S. and North Korea, at least for the day, as well as economic growth in Japan.
The Dow Jones Industrial Average closed 135 points higher. The S&P 500 closed 24 points higher. The NASDAQ closed 83 points higher.
******************************
Andrew P. Griffith, agricultural economist at the University of Tennessee points out in his weekly market comments that Choice boxed beef cutout value remained above $200/cwt. until Aug. 26; it breeched that mark this year on Friday.
“The concern comes in when considering the Choice cutout dropped below $180 during the back half of October 2016,” Griffith explains. “Could that be in store for the fall of 2017? Beef prices could continue to spiral downward over the next couple of months before holiday purchasing begins. Such a downward movement would put pressure on finished cattle prices as well as feeder cattle prices. If beef production remains elevated and exports falter the next few months then downside risk will remain and prices could fall below year-ago levels later in the year.”
On the other side of the coin, Griffith also notes the additional pressure on grain prices exerted by last week’s World Agricultural Supply and Demand Estimates.
“With a lower cost of gain on the table, there remains an opportunity to add weight to calves,” Griffith explains. “The lower cost of gain in feedlots could result in cattle feeders being more aggressive while purchasing cattle, but the likelihood of this is small given they have been aggressive throughout 2017.”