Sluggish negotiated cash fed cattle trade last week ended up lower across a broad range. Live sales were $4-$7 lower in Kansas at $110; $3.00-$3.50 lower in Nebraska at $109.00-$111.50; $2-$3 lower in Colorado at mostly $110; $2-$4 lower in the western Corn Belt at $110-$114. Likewise, dressed trade was $4-$5 lower in Nebraska at $176-$178; $2-$4 lower in the western Corn Belt at $180-$182.
More than anything, it seemed to be significantly lower outside markets (see below) that weighed on cattle futures Tuesday, increasing uncertainty and putting a halt to follow-through support early in the session.
Live Cattle futures closed an average of 79¢ lower (52¢ lower to $1.52 lower in spot Jun).
Feeder Cattle futures closed from 27¢ higher to 40¢ lower.
Boxed beef cutout values were steady to weak Tuesday on light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service (AMS).
Choice boxed beef cutout value was 13¢ higher in the afternoon at $227.56/cwt. Select was 97¢ lower at $203.65.
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Major U.S. financial indices closed sharply lower Tuesday, but off of session lows. Political turmoil in Italy was the primary source of pressure as investors fretted that upheaval in the third largest EU economy (GDP) could lead to that nation exiting the EU and the Euro, perhaps unraveling both. Never mind wonderments about Italy’s enormous debt. Softer crude oil prices added to the angst.
The Dow Jones Industrial Average closed 391 points lower. The S&P 500 closed 31 points lower. The NASDAQ closed 37 points lower.
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“The recent trend of declines in animal placed into feedlots suggests that the number of animals in feedlots will decline seasonally until September,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “Importantly, the percentage increase compared to 2017’s is projected to continue dropping through the summer months. This year, the seasonal drop could be larger than normal. By Sept. 1, the number of cattle on feed could be only 1% to 3% above 2017’s.”
As noted in the last Cattle Current, according to Friday’s monthly Cattle on Feed report, total cattle on feed May 1—feedlots with 1,000 head or more capacity—of 11.558 million head were 5.09% more than the previous year. That’s the second most cattle on feed May 1 since the series began in 1996, according to the National Agricultural Statistics Service.
“Year-over-year increases in the on-feed count have been in place since early 2016; the percentage increase surged beginning in late 2017 as a result of more animals placed into feedlots, largely due to drought,” LMIC analysts explain. “Many of those lightweight animals have been in feedlots for 8-10 months. In the last two months that picture has been changing, with head placed significantly below a year ago.”
Placements in April were 8.28% less than a year earlier. In March, placements were 9.26% less. That was the first year-over-year decline for placements since February 0f 2017.
“The marketings of fed cattle throughout most of 2017 were strong, especially when compared to 2016’s,” LMIC analysts say. “Daily average marketings have remained above year-ago levels every month so far this year. Typically, the biggest months for fed cattle marketed are May and June; that is expected to be the situation again this year.”