Cash fed cattle trade for the week continued at an impasse on Thursday, as Cattle futures crawled higher—continuing the week’s two-sided action—helped along by firming wholesale beef values and steady to stronger cash fed cattle prices at auction.
Except for 20¢ higher at the back of the board, Live Cattle futures closed an average of 83¢ higher (45¢ to $1.12 higher).
Except for 2¢ higher at the back of the board, Feeder Cattle futures closed an average of $1.50 higher ($1.35 to $1.70 higher).
Choice boxed beef cutout value was 16¢ lower Thursday afternoon at $197.26/cwt. Select was 77¢ lower at $188.78.
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Major U.S. financial indices closed higher again on Thursday as investors deemed the House budget approval another stepping stone to tax reform.
The Dow Jones Industrial Average closed 113 points higher. The S&P 500 closed 14 points higher. The NASDAQ closed 50 points higher.
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“While we have seen increases over the past few months, cold storage inventories have remained below 2016 levels on a monthly basis since February despite increases in beef production,” says Josh Maples, livestock economist at Mississippi State University, in the latest issue of In the Cattle Markets. “Beef production in July was 4% higher than July 2016. The large increase from July to August still leaves inventories (cold storage) just below the August 2016 total (less than 1% lower). Granted, cold storage inventories were large in 2016. While beef in cold storage is only a small component of the total beef supply picture, year-over-year stocks are not increasing even with larger beef production.”
Although most of the beef produced in the U.S. never enters cold storage, Maples explains inventories can be an indicator of overall market conditions.
“Cold storage inventories are primarily driven by the ground beef market and international trade,” Maples says. “Stocks may build up due to larger imports or to support larger exports as pointed out in the latest Livestock Monitor. “…The Cold Storage report indicated that frozen stocks were at 476.3 million lbs. Aug. 31. This represented a 10.3% increase in stocks compared to July. On a percentage point basis, this was the largest increase for August stocks over July since 2002. It also followed moderate month-over-month increases for the previous three months. Cold storage inventories typically increase seasonally near the end of the year and then decline into the summer grilling-season months.”