Between wonderments about the top in cash fed cattle prices, how much room is left for wholesale beef values to run, and the prospects of another massive placement number in the monthly Cattle on Feed report due out Friday, Cattle futures began the week with plenty of uncertainty. That feeling was underscored by strong early support that faded by session’s end.
Live Cattle futures closed unchanged to an average of 12¢ lower.
Other than 22¢ higher in spot Nov, Feeder Cattle futures closed an average of 38¢ lower.
Choice boxed beef cutout value was $1.04 lower Monday afternoon at $212.81/cwt. Select was 68¢ lower at $193.83.
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Major U.S. financial indices closed slightly higher on Monday.
The Dow Jones Industrial Average closed 17 points higher. The S&P 500 closed 2 points higher. The NASDAQ closed 6 points higher.
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Although cash fed cattle prices were a touch softer last week, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University points out that that prices remain higher than most expectations.
Likewise, even with the lower futures prices last week, Peel notes in his weekly market comments, “Live futures are still offering attractive levels to lock in fed cattle for the spring. It’s not clear if cattle futures are simply making a technical correction and some profit taking, but the long speculative position in the markets makes it vulnerable to move lower. The opportunities currently offered may be fleeting.”
The same goes for feeder cattle cash and futures prices.
“The good news is that moves lower have thus far been quite orderly and spring contracts remain at levels that offer unusual opportunities for feeder cattle producers to lock in attractive margins,” Peel explains. “As with Live Cattle futures, current Feeder futures are built on long speculative positions that could turn and allow an abrupt and sharp drop. The opportunity is there but may be passing.”
Moreover, even with sharply lower year-to-year carcass weights this year that diluted the impact of increasing cattle numbers, Peel says beef production next year is projected 4% higher, on top of an estimated 4% increase this year. Pork and broiler production are also projected higher next year.
“Strong beef demand, both domestically and internationally, has supported cattle and beef prices in 2017,” Peel says. “At the current time, retail beef prices are holding close to year-ago levels with boxed beef and cattle prices at all levels higher than this time last year.”