Cattle futures closed lower on Monday, following limited early support. Presumably part of the pressure came from notions that cash fed cattle prices must move lower this week, although there are plenty of fundamental reasons to suggest the opposite, including aggressive feedlot marketings and wholesale beef values that seem to have turned the corner.
Live Cattle futures closed an average of $1.18 lower (87¢ to $1.82 lower).
Feeder Cattle futures closed $1.52 lower (95¢ to $2.40 lower).
Choice boxed beef cutout value was 60¢ higher Monday afternoon at $197.22/cwt. Select was 22¢ lower at $188.28.
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Major U.S. financial indices closed higher on Monday, with those cited here settling at record-high levels. Other than popping the cork on a new quarter and continued optimism surrounding proposed tax reform, there didn’t seem to be a clearly defined driver.
The Dow Jones Industrial Average closed 152 points higher. The S&P 500 closed 9 points higher. The NASDAQ closed 20 points higher.
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Currently available slaughter capacity at U.S packing plants will be sufficient to handle the increase in cattle numbers over the next two years, according to a new report from CoBank’s Knowledge Exchange Division.
“Plants will add additional slaughter hours to manage the extra supply through 2019,” says Trevor Amen, animal protein economist at CoBank. “The biggest potential concerns as the industry drifts closer to maximum packing capacity are labor availability and temporary plant closures for unforeseen maintenance issues.” He adds that processors are expected to increase investments in automation and robotics to reduce the risk of skilled labor shortages.
The CoBank report notes that Saturday slaughter hours have been increasing steadily since the middle of 2016. Analysts note that it is unlikely that packers will need to reopen shuttered plants or build additional facilities.
For perspective on increasing cattle numbers, CoBank projects beef cowherd expansion at 3-5% in 2018 and 2019. USDA estimates the 2017 calf crop will top 36 million head, an increase of 2.9% over 2016 and an 8.3% more compared to the cyclical low calf crop in 2014.