Negotiated cash fed cattle trade for the week was generally steady to $1-$3 higher at $120-$121/cwt. on a live basis. Dressed prices were mostly steady to $2 higher at $190.
However, faltering wholesale beef values and growing uncertainty about beef demand heading into the end of the year helped fuel long liquidation in Cattle futures on Friday, along with technical selling.
Choice boxed beef cutout value was $5 lower week to week on Friday, despite being $1.35 higher day-to-day at $205.99. Select was 60¢ lower on Friday at $183.61; $4.24 lower week to week.
Live Cattle futures closed an average of $2.53 lower ($1.97 to $3.00 lower).
Feeder Cattle futures closed an average of $3.29 lower (87¢ to $4.25 lower).
“It almost seems to be a case of the tail wagging the dog as fundamentals in the market seem consistent with previous weeks, yet prices turned and headed south,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments “There is a good possibility that technical trading in the Live Cattle market is the cause of the downturn in Feeder Cattle futures. The turn in the live cattle market had packers hesitant to purchase finished cattle late in the week at cattle feeders’ asking prices, which then bleeds into the feeder cattle market.”
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Major U.S. financial indices closed lower on Friday, apparently fueled by worries that revelations by Michael Flynn, short-lived National Security Advisor, could impair or derail the Trump administration.
The Dow Jones Industrial Average closed 40 points lower. The S&P 500 closed 5 points lower. The NASDAQ closed 26 points lower.
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“Load-lot prices continue to prove profitable for cow-calf and stocker producers as winter is quickly approaching,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Weekly auction market prices also continue to be favorable for profitability for cow-calf producers, as well as offering purchasing opportunities to stocker producers.”
In fact, Griffith explains market fundamentals and prices are such that it’s difficult to encourage cow-calf producers to sell now or hold calves and add some weight for marketing the first part of the new year.
“Many producers will make the decision to cash out in the near term, which is difficult to argue with,” Griffith says. “Other producers will hold on a little while longer, which is also difficult to argue against. It is hard to be frustrated with positive returns in business as risky as this.”