Futures and equity markets were closed Monday in observance of President’s Day. When traders get back to work Tuesday, there is no apparent reason for them to poor-mouth Cattle futures. Cash fed cattle prices ended mostly $4-$5 higher last week on a live basis at mostly $130/cwt. Dressed trade was $5 higher at $205.
Wholesale beef values also bounced higher to start the week. Choice boxed beef cutout value was $2.69 higher on Monday afternoon at $212.57/cwt. Select was $2.31 higher at $207.43.
There’s sure to be plenty of wariness, though, with the monthly Cattle on Feed report due out on Friday.
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“The strong start for beef and cattle markets is encouraging, but plenty of challenges remain in 2018,” says Derrell Peel, extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Beef production, already up over 3% so far this year, is expected to be up 4.5-5.0% for the year. Increased beef production will result from increased cattle slaughter and likely higher carcass weights. Feedlots are carrying larger inventories of feedlot cattle into the year and the 2% increase in the 2017 calf crop ensures that feeder numbers will continue to grow in 2018. Strong domestic and international demand is critical to limit the supply pressure of growing beef production in 2018.”
Supply and demand factors that Peel says are critical this year include carcass weights and trade issues.
“Carcass weights will be the key to just how much supply pressure will affect beef markets in the coming year,” Peel says. “Currently average cattle carcass weights are higher year over year as a result of heavier heifer and cow carcasses; with steers about equal to last year. Carcass weights are likely to bounce back some from last year’s sharp drop but just how much will determine total beef production. Along with increased beef production, growing pork and poultry production will result in record total U.S. meat production in 2018, adding to the supply challenges for all meat industries.”
As for trade issues, Peel explains decisions regarding NAFTA and KORUS could have far-reaching ramifications for cattle and beef markets, as could trade tensions with China.
“U.S. macroeconomic and global economic conditions generally could rise up to be a more prominent factor in beef markets,” Peel says. “Recent volatility in the stock market is a reminder that external factors can jump up quickly and may impact agricultural markets. Interest rates are likely to rise faster and more in 2018.”