Packers and feeders drew the line between bids and asking prices deeper in the sand yesterday, with cash fed cattle trade yet to develop through late in the afternoon. Perhaps packers were eyeing stagnant wholesale beef values and hoping for bearish news in Friday afternoon’s monthly Cattle on Feed report (see below). On the other side, it could be feedlots sensing a seasonal bottom at hand with spot Live Cattle futures moving toward the away months this week rather than the other way around.
Cattle futures closed mostly narrowly mixed on Thursday, other than some apparent defensiveness and positioning in nearby contracts for the aforementioned reasons.
Except for 85¢ lower in spot Oct and 5¢ lower in Dec, Live Cattle futures closed 7¢ to 40¢ higher.
Feeder Cattle futures closed an average of 98¢ lower through the front three contracts and then 2¢ to 7¢ lower, except for 10¢ higher in Jan and 42¢ lower at the very back.
Choice boxed beef cutout value was 53¢ lower Thursday afternoon at $191.51/cwt. Select was 11¢ lower at $188.41.
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Major U.S. financial indices closed lower on Thursday. Other than rally fatigue, there didn’t seem much hard news to drive the move.
The Dow Jones Industrial Average closed 53 points lower. The S&P 500 closed 7 points lower. The NASDAQ closed 33 points lower.
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With Friday’s monthly Cattle on Feed report in mind, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University points out, “Average monthly feedlot placements have been sharply higher for about 15 months, but monthly marketing grew as well. As a result, we haven’t grown the feedlot inventory too rapidly.”
Peel points out that the positive cattle feeding returns until recently encouraged aggressive marketing. Along with robust domestic and international demand, he says that continues to help mitigate the impact of increasing cattle numbers and beef production.
With feedlots apparently pulling some cattle forward earlier in the year, some expect August placements to be lower than last year.
These were among the insights Peel provided at yesterday’s annual Kansas State University Beef Stocker Field Day. Peel also provided perspective on national herd expansion.
“It looks like we’re still growing the cowherd to some extent,” Peel says. He expects growth of 1% to 2% this year, then flat to minimal growth in 2018.
Although heifer slaughter is increasing, Peel says the steer-to-heifer slaughter ratio suggests slowing herd growth but certainly not liquidation.